In Washington D.C., during the symposium for Artificial Intelligence and the Economy at the Stanford Institute for Human-Centered Artificial Intelligence, Michael Hsu, head of the Office of the Comptroller of the Currency (OCC) declared: “To ensure that stablecoins are open and inclusive, I believe a standard-setting initiative similar to that undertaken by the Internet Engineering Task Force and World Wide Web Consortium needs to be established, with representatives, not just from crypto/Web3 firms but also including academics and government”.
Hsu considers that stablecoins require standards to become interoperable and overtly expressed the willingness of the OCC to work with other government offices, for instance, the National Institute of Standards and Technology, to pursue further research about the topic.
Michael Hsu is also a member of the Financial Stability Oversight Council, the task force aimed to study whether stablecoins represent a potential risk to the U.S. financial system, and a member of the President’s Working Group on Financial Markets, the same group that established that the issuers of stablecoins to be treated as regulated banks.
In the same vein, a report from The Block spread the buzz that U.S. Representative and member of the Financial Services Committee, Tom Emmer, is drafting a bill that would give the Securities Exchange Commission jurisdiction over stablecoins that produce dividends and distribute all or part of the income to the holders. The draft that circulated would set a new regime for stablecoins with a voluntary registry.
It will be relevant to thoroughly scrutinize the legislative proposal when Representative Emmer presents it because there are many questions in the air. Firstly, according to the draft that circulated, the bill appears to consider stablecoins that provide dividends within the protocol that launches them, which leaves unclear the treatment for the yields that are generated in other Decentralized Finance platforms and cross-chain aggregators that provide lending or yield farming products of digital assets that are not native to the platform.
Secondly, the draft is supposedly considering the income made from the investment of assets backing the stablecoin, which rules out algorithmic stablecoins that are not backed by any asset, for instance, Ampleforth stabilizes the price of the token around a target by building a volatility footprint that adjusts the token balances in wallets or Terra stablecoins that are not implicitly backed by an asset, but uses a dumbbell where Luna absorbs the volatility of the stablecoins.
A more certain fact is that oversight of stablecoins will get more traction as the total supply is currently over $182 billion.