Stablecoins were rolled out to steer away from the scrutiny imposed by the government following the volatile nature of cryptocurrencies. However, now even stable coins have made their way under the purview of the government. Social media giant, Facebook’s interest in rolling out a stablecoin undoubtedly stirred up some heat in the world. While regulators across the globe have been stressing on platforms to spruce up their money laundering processes, stable coins seem to be the latest interest of these regulators.
Stablecoins Could Pose Money Laundering Risks
The Treasury Department along with several other agencies in the United States suggested that platforms hoarding stablecoin services had to bolster their rules and regulations against money laundering. A recent press release titled, “President’s Working Group on Financial Markets Releases Statement on Key Regulatory and Supervisory Issues Relevant to Certain Stablecoins”, by the United States Department of the Treasury, suggested that these crypto-assets were to be operated in a “responsible” way.
While suggesting that the President’s Working Group on Financial Markets [PWG] viewed stablecoins as an efficient means of digital payment as it entails the potentials to “enhance efficiency, increase competition, lower costs, and foster broader financial inclusion” Despite this, the PWG suggested that stablecoins should be designed and administered in a more productive manner.
The PWG expects the assets to function efficiently without disrupting the stability of the monetary system in the country as well as internationally while managing risks associated with it.
The Deputy Secretary of the Treasury, Justin Muzinich elaborated on the same and stated,
“The statement reflects a commitment to both promote the important benefits of innovation and to achieve critical objectives related to national security and financial stability. Regulators will continue to look closely at stablecoin arrangements, and look forward to future dialogue on these issues.”
While the fate of Facebook’s Diem [Libra] is still uncertain, Tether, the largest stable coin, continues to surge in terms of market cap. The asset even took over XRP and now stands as the third-largest crypto asset with a market cap of $20 billion.