FDIC acting chairman wants stablecoins to be safer before integration into financial system
Acting Chairman of the Federal Deposit Insurance Commission (FDIC) Martin Gruenberg It acknowledges the role of stablecoins in the digital economy, but argues that they need to be properly regulated before they can be integrated with mainstream payment systems.
Martin Gruenberg Speech on October 20th Delivered on the Brookings Center, the FDIC said it is working with banks to maintain compliance while offering crypto-related services.
Gruenberg said stablecoins have the potential to become a trusted source of payments in the mainstream economy as they can provide secure, efficient, cost-effective and real-time payments.
However, due to the increasing number of cases of stablecoin de-pegging and UST collapse, the current stablecoin system is not suitable for integration into the financial system.
Making stablecoins safer
Gruenberg said certain policy recommendations need to be considered to make stablecoins more secure and coexistent with the Fed’s FedNow payment system.
FDIC officials said regulation is essential for stablecoins to fully integrate into the financial system. An effective way to achieve this is to issue stablecoins through bank subsidiaries supervised by the Fed.
He added that short-term assets like US Treasury bills can guarantee the safety of stablecoins. This makes it easier to exchange stablecoins for fiat currency.
To check for money laundering activity, Gruenberg recommends issuing stablecoins on a permissioned blockchain. This makes it easier for relevant authorities to know all parties involved, including nodes and validators facilitating transactions in the system, he said.
Stablecoins could disrupt banking
However, Gruenberg expressed concern that a compliant stablecoin could change the way banking systems operate.
He argued that stablecoins could facilitate the use of fintech and non-bank services, rob more credit from many U.S. banks, and create a foundation for shadow banking.
To address this concern, regulators need to decide whether to allow non-banks to offer stablecoins or limit their issuance and operation to only federally regulated banks, Gruenberg said. said Mr.
