- The Treasury Department and other financial regulators in the United States have been scrutinizing stablecoin operators under Secretary Janet Yellen.
- Tether and other stablecoins are deemed the most urgent risks by Treasury officials.
- US regulators are preparing to clamp down on the digital asset industry as officials will discuss launching a formal review into stablecoins.
The United States Treasury Department is preparing to present a report to the President’s Working Group for Financial Markets on stablecoin risks. The report is expected to set the framework for a new approach to the crypto asset industry in the country, according to a recent report.
US regulators continues to clamp down on crypto
Tether and other US dollar-backed stablecoins, are some of the most traded cryptocurrencies in the industry. Due to the nature of the backing of their reserves, regulators are concerned about their use in manipulating markets.
Secretary Janet Yellen has previously urged the Presidential Working Group on Financial Markets (PWG) to look into strengthening stablecoin regulation. She added that there needs to be an appropriate US regulatory framework in place.
A team of top financial regulators including Yellen, Federal Reserve Chairman Jerome Powell and Securities & Exchange Commission (SEC) head Gary Gensler came together to discuss their approach on stablecoins on July 19.
The use of stablecoins continues to be a major concern for top regulators and Treasury officials for the report that is about to be presented to the PWG.
According to a recent Bloomberg report, the Treasury and other agencies are coming close to making a decision on whether to launch an investigation into whether stablecoins threaten financial stability.
Treasury officials have already been meeting with representatives from financial institutions on regulations around stablecoins and other digital asset concerns last week, according to Reuters.
As financial regulators continue to clamp down on the growing cryptocurrency industry, officials are expected to launch a formal review by the Financial Stability Oversight Council into whether stablecoins pose a threat to the US economy.