Key points to remember
- The Office of the Comptroller of the Currency said stablecoins need a common standard.
- He claimed that stablecoins should be interoperable with each other.
- He recalled the current state of stablecoins in the early days of the Internet.
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The acting head of the Office of the Comptroller of the Currency asserted that stablecoins should be given a common standard similar to how some web standards of practice were established in the early days of the internet.
The state of stablecoins in the cryptocurrency markets has been criticized by a major regulator in the United States.
Michael Hsu, the head of the Office of the Comptroller of the Currency, an independent office of the US Treasury Department responsible for regulating and supervising banks, said stablecoins must become interoperable with each other. He pointed to the potential benefit that could arise if companies that issue stablecoins put forth and adhere to a technical standard.
Speaking in the nation’s capital at the symposium on Artificial Intelligence and the Economy: Charting a Path for Accountable and Inclusive AI, OCC Acting Chief Hsu said:
“To ensure that stablecoins are open and inclusive, I believe that a normative initiative similar to that undertaken by [the Internet Engineering Task Force] and [World Wide Web Consortium] needs to be established, with representatives from not only crypto/Web3 companies, but also academics and government.
Hsu also noted the OCC’s willingness to work with other government agencies to help stablecoin companies develop a single technical standard such as those practiced in the internet’s infancy. The OCC could tap into the National Institute of Standards and Technology, for example, to facilitate the adoption of a shared standard for stablecoins, through which they could be interoperable.
Stablecoins are meant to provide a more stable asset through which to trade and store value via their peg to other assets, such as dollars. There are several on the market, ranging from those issued by centralized companies, such as Tether’s USDT and Circle’s USDC, to decentralized (or algorithmic) stablecoins like MakerDAO’s DAI or Terra’s UST.
Stablecoins have been a hot topic of discussion for US regulators and lawmakers in recent months. Last December, the US Senate Banking Committee held a hearing on stablecoins, and committee chair Senator Sherrod Brown noted that stablecoins make it easier for people to risk their money on crypto. -volatile or even fraudulent currencies. However, at the February House Financial Services Committee hearing, the consensus among members of Congress appeared to favor not forcing stablecoin issuers to become insured depository institutions.
Today it was reported that Rep. Tom Emmer (R-MN) has drafted legislation that would place certain yield stablecoins under the jurisdiction of the SEC.
Disclosure: At the time of writing this article, the author of this article owned BTC, ETH, and several other cryptocurrencies.