AFR Statement on President’s Working Group Report on Stablecoins

The Americans for Financial Reform Education Fund views the current state of the stablecoin market as a danger to consumers and to financial stability, and we are disappointed that the President’s Working Group (PWG) has focused on Congressional action as the central path for responding to these challenges. We are also concerned that the report appears to take the industry’s word about the nature and advantages of stablecoins as a payment system, rather than focusing on their actual use as an on-ramp for speculation. 

We are worried that the PWG report opens the door for stablecoin issuers and market participants to play an outsized role in creating the rules meant to supervise them and serve the public interest. This was a lost opportunity for the PWG to emphasize and clarify the tools regulators currently have at their disposal to put in place and enforce guardrails for this growing $130 billion market. These include the SEC and CFTCs authority over digital asset offerings and over intermediaries and exchanges, and DOJ’s power under Sec 21(a) of the Glass-Steagall act.

We urge regulators to act swiftly and use the full scope of their authority to enforce current law and develop new guidance and rules where necessary, and we urge Treasury and the FSOC to consider what active roles they can play. 

Furthermore, we urge the Treasury and the PWG to use this opportunity to design a whole-of government approach to improving our current payment system to be more inclusive and less  costly by lowering transaction fees and shortening settlement periods. The fast growth of  unregulated stablecoins highlights why implementing FedNOW and building a central bank  digital currency should be top priorities for regulators.