Challenging a recent report from the President’s Working Group on Financial Markets, Federal Reserve Governor Christopher Waller said at a financial stability conference today that stablecoins need not be issued only by insured depository institutions. “The regulatory and supervisory framework for payment stablecoins should address the specific risks that these arrangements pose—directly, fully, and narrowly,” he said. “It does not necessarily mean imposing the full banking rulebook, which is geared in part toward lending activities, not payments.”
Waller acknowledged that stablecoins—which are crypto assets that are pegged to an external benchmark to minimize volatility and maximize usefulness for payments—should be understood “as a new version of something older and more familiar: the bank deposit.” The “biggest gap” between stablecoins and bank funds,” Waller added, is “robust, consistent supervision and regulation and appropriate public backstops. . . . Today, stablecoins lack that oversight.”
But while Waller agreed about stablecoin risks highlighted by the PWG report, he said the idea of requiring stablecoin issuers to be banks would “forc[e] a new product into an old, familiar structure.” Among the features he recommended for a stablecoin regime would include ensuring a stablecoin’s reserve funds are maintained as promised. Where some observers have raised concerns about the use and security of the payment data a stablecoin issuer might have access to, Waller said that “there are new questions to consider, such as around the use of customers’ financial transaction data, but where anticompetitive behavior happens, existing law (and particularly antitrust law) should still apply.”
