U.S. is considering new rules for stablecoins - here's what this means for crypto

Yahoo Finance's Jennifer Schonberger breaks down the latest on the U.S. and potential new rules for stablecoins.

Video transcript

BRIAN CHEUNG: We spoke with SEC chair Gary Gensler earlier in the week who mentioned that stablecoins are a lot like chips at a casino, but we might get more regulatory clarity on exactly what he means by that when the president's working group, which is actually led by the Treasury, is going to release its report on stablecoins, which could include some recommendations for how to approach the space.

For more on this, let's bring in Yahoo Finance's Jennifer Schonberger, who has been covering this pretty closely. Jen, obviously, we don't know the details of this report yet, but what are you expecting based off of the chatter down there in DC on what we might glean from that president's working group report?

JENNIFER SCHONBERGER: Hey, good morning, Brian. Yeah, so this report should be coming out soon. Officials had said late September or October. So should be coming out here soon. There were some reports that the SEC is going to garner significant new authorities to oversee stablecoins. However, an official that I spoke to that's involved with that report telling me that the SEC is not going to be given significant new authorities, but will just retain the current authorities that it already has over stablecoin.

Now, we know that regulators have been considering bank-like regulations to oversee stablecoins, sort of regulating them like bank deposits. Money market funds have also been on the table. So we'll see what happens when this report comes out. And speaking with the head of the Digital Chamber of Commerce, which is the largest lobbying group in the crypto industry, they tell me that they're concerned, actually, from what they're hearing from regulators, specifically on the notion that stablecoins could offer systemic risk to the financial system.

Perianne Boring, the head of the Digital Chamber, telling me that she just doesn't see how that could be the case, given that US stablecoin issuers-- and that's what they focus on, so not Tether-- mostly are backed with cash and very liquid assets. So she does not see it as a systemic risk. So certainly, we'll see what happens when this report comes out.

BRIAN CHEUNG: And one interesting follow-up here is, again, how this approach would work, and, again, to emphasize this is the president's working group, so it's not like it's just the Treasury that's trying to figure out what's going on here. A lot of regulators could be involved, including the SEC on one front.

But have the FDIC, the Federal Reserve, the OCC, those primary banking regulators, been involved with these discussions? Is there any sort of indication about how they might want to approach these types of things? We heard Fed officials flag the risk of money going out of prime money market funds and into these types of largely unregulated securities, but any indication on how they might be called to the front lines in this?

JENNIFER SCHONBERGER: Yeah, so Treasury is taking the lead on this, but they are working very closely with the other regulators. Unclear at this point whether the FDIC would insure stablecoins, as they do regular bank accounts. So there have been some reports out there that that may be on the table. We know that the OCC has been considering granting national bank charters to certain entities.

So we'll see if that is on the table as well, the Digital Chamber of Commerce says that that should not be mandatory. Rather, it should just be an option if stablecoin issuers opt for that. So, again, most of those agencies not getting ahead of the Treasury here, who's been the lead on this, but working closely, whether it's potential for capital requirements, baked charters, FDIC insurance, and what have you.

BRIAN CHEUNG: A lot of possible routes to go down, but again, we'll get more clarity once that report comes out. Yahoo Finance's Jennifer Schonberger, thanks again for breaking all of that down for us.