Regulators are worried about whether stablecoin firms hold enough liquid assets to back up the value of the currency they issue. They have lined up in recent weeks in a series of virtual and in-person meetings with banking and financial regulators, seeking to shape the new rules while largely acknowledging that some form of federal oversight is now inevitable. The regulatory push has generated a wave of lobbying by cryptocurrency executives. Stablecoins now underpin a growing share of cryptocurrency transactions globally, at a time when the total value of outstanding crypto tokens like Bitcoin is about $2 trillion - roughly the same value as that of all United States dollars in circulation. Largely known as a vehicle for speculation, cryptocurrency is increasingly starting to transform banking and finance and is stirring discussions over whether governments should issue digital currencies of their own to augment or eventually replace their traditional currencies.

“It feels like we may be on the cusp of another with cryptocurrencies.” “I have seen one fool’s gold rush from up close in the lead-up to the 2008 financial crisis,” Michael Hsu, the acting comptroller of the currency said, in remarks on Tuesday. The push by the Biden administration to exert some control over stablecoins is the leading edge of what is likely to be a far more expansive debate over the government’s role in regulating cryptocurrencies - a topic generating increased concern in Washington.

regulatory framework in place,” Nellie Liang, an under secretary of the Treasury who is helping lead the effort, said in a statement. “It is important for the agencies to act quickly to ensure there is an appropriate U.S. Just this year, dollar-tied stablecoins such as Tether token, USD Coin and Pax Dollar have jumped from $30 billion in circulation in January to about $125 billion as of mid-September. The use of stablecoins is surging rapidly, and regulators have grown increasingly concerned that they are not in fact stable, and could lead to a digital-era bank run. The idea is to make it easier for people holding cryptocurrency - which is notorious for its frequent price swings - to carry out transactions like purchasing goods and services, or to earn interest on their crypto holdings. The value of a stablecoin is ostensibly pegged one-to-one to the United States dollar, gold or some other stable asset.

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