By Jonnelle Marte
(Reuters) – A stronger regulatory and supervisory framework is needed to ensure that stablecoins are a safe form of payment, but they should not necessarily be subject to all of the same rules as banks, Federal Reserve Board Governor Christopher Waller said on Wednesday.
“The regulatory and supervisory framework for payment stablecoins should address the specific risks that these arrangements pose — directly, fully, and narrowly,” Waller said during a virtual conference organized by the Cleveland Fed. “But it does not necessarily mean imposing the full banking rulebook, which is geared in part toward lending activities, not payments.”
Stablecoins, a form a virtual currency with values pegged to more traditional assets such as the U.S. dollar or commodities, are part of a fast-growing market. Some analysts say they expect stablecoins could have greater potential than some other cryptocurrencies such as bitcoin of being used as a mainstream form of payment.
The policymaker said he disagrees with some of the recommendations made earlier this month in a report by the President’s Working Group on Financial Markets, which called on Congress to regulate issuers of stablecoins like banks.
Waller also said that while he would be okay with the idea of banks being able to issue both bank deposits and stablecoins, he disagrees with the idea that only banks should be able to issue stablecoins.
The Fed official added that he is still skeptical of the need for a central bank digital currency, or CBDC, because there is already “real and rapid innovation” happening in the payments space.
The U.S. central bank is exploring whether it should issue a digital version of the dollar and is expected to release research on the topic soon. But Waller said he does not think the government should create a CBDC with the idea of trying to drive down payments costs.
(Reporting by Jonnelle Marte; Editing by Andrea Ricci)