On July 16, 2021, Secretary of the Treasury Janet Yellen announced that the President’s Working Group on Financial Markets (PWG), the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation (FDIC) would all convene to discuss interagency work on stablecoins this upcoming July 19. A stablecoin is a type of cryptocurrency that is backed by a reserve asset, which could be a fiat currency like the U.S. dollar, gold, or other cryptocurrencies, and which attempts to offer more price stability compared to the volatility often present in other cryptocurrencies.

The goal of the meeting and the PWG is to examine the current regulation of stablecoins, identify any existing and potential risks, and develop recommendations to address those risks. The meeting aims to build upon the PWG’s December 2020 “Statement on Key Regulatory and Supervisory Issues Relevant to Certain Stablecoins” (the “Statement”). The Statement provided the following initial assessment on key regulatory and supervisory considerations regarding stablecoins:

  • The U.S. encourages responsible payment innovations
  • Stablecoins must comply with applicable U.S. legal, regulatory, and oversight requirements, including but not limited to “safety and soundness, countering illicit finance, end-user protection, and market integrity”
  • Participants and arrangements of stablecoins must meet all applicable anti-money laundering and countering the financing of terrorism (AML/CFT) and sanctions obligations, including potential registration with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN), implementation of an effective AML program, and complying with record-keeping requirements and suspicious activity reporting
  • Some stablecoins may constitute a security, commodity, or derivative subject to U.S. federal securities, commodities, and/or derivatives laws
  • Stablecoins that are primarily used for retail payments and adopted at a significant scale may require additional safeguards
  • U.S. authorities will continue to assess evolving technology and market landscapes as well as the U.S. regulatory framework for stablecoin oversight
  • Authorities will pursue robust international collaboration in matters related to stablecoins

The PWG was created to strengthen U.S. financial markets and its current members include Treasury Secretary Yellen, Chair of the Board of Governors of the Federal Reserve Jerome Powell, Chair of the Securities and Exchange Commission (SEC) Gary Gensler, and Acting Chairman of the Commodity Futures Trading Commission (CFTC) Rostin Behnam.

A press release of Secretary Yellen’s July 16 announcement is available here.

For more information regarding digital currencies, contact our team and see a previous post below.

OFAC’s First Enforcement Actions Against Digital Currency Service Providers | International Trade Law (cmtradelaw.com)

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Photo of Anand Sithian Anand Sithian

Anand Sithian is a counsel in Crowell & Moring’s New York office. He is a member of the International Trade and the White Collar & Regulatory Enforcement groups. Anand advises clients on a variety of regulatory issues and investigations relating to anti-money laundering…

Anand Sithian is a counsel in Crowell & Moring’s New York office. He is a member of the International Trade and the White Collar & Regulatory Enforcement groups. Anand advises clients on a variety of regulatory issues and investigations relating to anti-money laundering (AML), the Bank Secrecy Act (BSA), U.S. economic sanctions, including those administered by the Office of Foreign Assets Control (OFAC), and asset forfeiture matters. Anand routinely counsels clients on the novel application of these laws and regulations to issues involving financial institutions, technology and social media, virtual currency and digital assets (including the seizure and forfeiture of virtual currencies), and the evolving cannabis industry.

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Photo of Frances P. Hadfield Frances P. Hadfield

Frances P. Hadfield is a counsel in Crowell & Moring’s International Trade Group in the firm’s New York office. Her practice focuses on forced labor and withhold release orders (WRO), import regulatory compliance, and customs litigation. She regularly advises corporations on matters involving…

Frances P. Hadfield is a counsel in Crowell & Moring’s International Trade Group in the firm’s New York office. Her practice focuses on forced labor and withhold release orders (WRO), import regulatory compliance, and customs litigation. She regularly advises corporations on matters involving customs compliance, audits, customs enforcement, as well as import penalties.

Frances represents clients before the U.S. Court of International Trade and the U.S. Court of Appeals for the Federal Circuit, as well as in proceedings at the administrative level. She advises corporations on both substantive federal and state regulatory issues that involve U.S. Customs and Border Protection, the Federal Trade Commission, Food and Drug Administration, and U.S. Fish & Wildlife in matters pertaining to product admissibility, audits, classification, import restrictions, investigations, marking, licenses, origin, penalties, and tariff preference programs.

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Photo of Martín Yerovi Martín Yerovi

Martín Yerovi is an international trade analyst in Crowell & Moring’s Washington, D.C. office. He provides practice support to the International Trade Group on import regulatory matters pending before the Office of the U.S. Trade Representative (USTR) and U.S. Customs and Border Protection…

Martín Yerovi is an international trade analyst in Crowell & Moring’s Washington, D.C. office. He provides practice support to the International Trade Group on import regulatory matters pending before the Office of the U.S. Trade Representative (USTR) and U.S. Customs and Border Protection (CBP). He works closely with attorneys developing courses of action for clients impacted by investigations under Section 301 of the Trade Act of 1974 and Section 232 of the Trade Expansion Act of 1962. He also supports unfair trade investigations, including antidumping (AD) and countervailing duty (CVD) investigations, sunset reviews, and changed circumstance reviews before the Department of Commerce and the International Trade Commission (ITC).

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