Last week, the Federal Reserve (Fed) and the U.S. Department of the Treasury (Treasury) noted potential risks associated with certain aspects of stablecoins. While the Fed affirmed that “the aggregate value of stablecoins[…] grew rapidly over the past year to more than $180 billion in March 2022,” and Treasury acknowledged that stablecoin and other digital assets, “present opportunities to promote innovation and increase efficiencies,” both warned of potential systemic risks, including liquidity and valuation issues during times of See more +

Last week, the Federal Reserve (Fed) and the U.S. Department of the Treasury (Treasury) noted potential risks associated with certain aspects of stablecoins. While the Fed affirmed that “the aggregate value of stablecoins[…] grew rapidly over the past year to more than $180 billion in March 2022,” and Treasury acknowledged that stablecoin and other digital assets, “present opportunities to promote innovation and increase efficiencies,” both warned of potential systemic risks, including liquidity and valuation issues during times of market stress and a vulnerability to runs. Both agencies addressed regulatory gaps in the digital assets sphere, with Treasury Secretary Yellen calling for the development of a “consistent federal framework” to address the “issues and opportunities posed by digital assets,” including stablecoins. See less -