Countdown to the regulatory meeting, the U.S. Treasury's Deputy Secretary of Domestic Finance delivers a vote of confidence: Stablecoins believed to be the foundation of future encrypted services.

Stablecoins have been confirmed to be included in the regulatory agenda of the Financial Stability Supervision Commission on October 18. The President's Financial Market Working Group will report on the latest developments regarding stablecoins. In good news, according to the Deputy Secretary of the Domestic Finance Department of the U.S. Department of the Treasury, the government will further regulate stablecoins rather than banning them outright.

Regulators Target Stablecoins

According to a report by Bloomberg, Nellie Liang, former Federal Reserve economist and current Under Secretary for Domestic Finance at the U.S. Department of the Treasury, stated during an online conference hosted by the Institute of International Finance:

U.S. financial regulators have shifted their focus to stablecoins as they have begun to play a central role in the cryptocurrency space, and we believe stablecoins are the foundation of the crypto sector and future crypto services.

She further noted that stablecoins are currently primarily used for cryptocurrency trading, show potential for use in payment mechanisms, and may gain widespread adoption in payment applications, prompting the President's Working Group on Financial Markets (PWG) to pay attention to all issues in this area.

Liang emphasized that the PWG will release a stablecoin report, focusing on four main aspects:

• Consumer and investor protection
• Regulatory prevention of financial crimes
• Protection of payment system integrity
• Protection of financial system stability

Stablecoins have faced a series of potential regulatory issues in the latter half of the year, including:

• 7/26 Senator's letter to Yellen: Stablecoins and DeFi risks pervade the financial system, urgent need for regulatory overhaul
• 9/11 Bloomberg report: Financial Stability Oversight Council (FSOC) to review stablecoins like Tether
• 9/21 SEC Chairman: Stablecoins are like casino chips, stablecoins under review
• 10/1 The Washington Post: USDT, USDC to be regulated like banks
• 10/8 Bloomberg report: White House considering executive order to regulate cryptocurrencies

Additionally, Bloomberg has repeatedly reported negatively on Tether's reserve system, USDC has adjusted its reserve system twice this year, and announced in August that it will be fully backed by "cash" and "short-term U.S. government securities" thereafter. These actions indicate potential regulatory pressure on stablecoins.

However, Liang's remarks indicate that the government will further regulate stablecoins rather than ban them outright.

According to an announcement on the U.S. Department of the Treasury website, stablecoins have been confirmed to be on the regulatory agenda. The Financial Regulators Group will hear the latest updates on the stablecoin report from the President's Working Group at a meeting on October 18, led by Treasury Secretary Yellen.