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U.S. Treasury due to issue guidance on stablecoins

Yahoo Finance's Jennifer Schonberger breaks down the latest on stablecoin regulation.

Video transcript

SEANA SMITH: Guys, we want to stick with crypto because the Treasury Department is due to issue guidance on stablecoins. That guidance is expected to come soon. Jennifer Schonberger has more on that for us. Jen.

JENNIFER SCHONBERGER: Hey, good afternoon, Seana. That's right. Crypto investors anxiously awaiting a proposal to regulate stablecoins from the president's working group on financial markets. That report due out this month and thus expected very soon. Reports have surfaced that the SEC is going to garner substantial new authorities to regulate stablecoins, but an official involved in the report tells me that is not the case. The SEC will simply retain the authorities it currently has to oversee stablecoins.

Now, we do know that regulators have been considering regulating stablecoins using bank-like regulations, regulating them as bank deposits. Money market funds have also been on the table. SEC chair Gary Gensler has likened stablecoins to poker chips used in a casino and has said that stablecoins should be classified as securities.

But the Digital Chamber of Commerce, one of the largest lobbying groups in the crypto industry, sent a 17-page letter to regulators this week, recommending that stablecoins not be regulated as securities nor money market funds. Instead, the industry says stablecoins are a payment instrument that should continue to be regulated under money transition licensing laws.

Perrianne Boring, founder and president of the Chamber of Digital Commerce, told me, quote, "We have concerns about what we have seen and heard from the PWG so far. We think the notion that stablecoins pose systemic risks is gravely misguided." Rapid growth of the stablecoin market is over $130 billion right now, up from $37 billion, at just the beginning of this year. And that's putting federal regulators on watch over systemic risk.

Regulators are concerned about a potential run on stablecoins, but Perrianne Boring of the Digital Chamber of Commerce says that US stablecoin issuers, which excludes Tether, are largely backed with cash and liquid assets. And she does not see major risks there. So, Seana, all eyes on this report when it comes out and what it means for investors in crypto. Back to you.

SEANA SMITH: All right, Jennifer Schonberger, thanks so much.