White House releases stablecoin report, says regulators could consider limiting 'multi-currency stablecoins'

The White House has released a statement on regulatory considerations for stablecoins — and it includes the potential for limitations on "multi-currency stablecoins."

The statement comes from the President's Working Group on Financial Markets, which is a Treasury-centric working group that makes recommendations to the president and federal regulators. 

The group highlighted the importance of anti-money laundering and counter financial terrorism measures, including on-chain know-your-customer (KYC) verification among all parties, even unhosted wallets. This comes after the Financial Crimes Enforcement Network unveiled a proposed rule that would also create heightened KYC requirements for transactions between money service businesses and unhosted wallets.

The new report also said stablecoin issuers should be able to comply with sanctions obligations, as well as have the ability to enable one-to-one redemptions. Since algorithmic stablecoins like Empty Set Dollar and crypto-backed stablecoins like Dai aren't backed with fiat currencies, it is unclear how these stablecoins might be affected by the working group's suggestions.

The working group's statement also suggests that stablecoins could pose a threat to "international monetary stability" and recommends actions so that "stablecoin arrangements should not undermine confidence in and the ability of domestic fiat currencies." 

“The statement reflects a commitment to both promote the important benefits of innovation and to achieve critical objectives related to national security and financial stability.  Regulators will continue to look closely at stablecoin arrangements, and look forward to future dialogue on these issues,” Treasury Deputy Secretary Justin Muzinich said in a statement.

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Aislinn Keely joined The Block in the summer of 2019. She is a member of the outlet's policy team, holding down the legal beat. Before The Block, she lent her voice to the NPR affiliate WFUV, where she reported and anchored newscasts in addition to some podcast work. Aislinn is a proud Fordham Ram and editor-in-chief emerita of its newspaper. When she isn't writing or reporting, Aislinn is running and rock climbing.

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