Bennett Tomlin offers a useful summary here of what is currently playing out in the USA on the regulation of stablecoins. His conclusion is that the future of stablecoins lies in some form of bank like regulation.
It is difficult to say exactly how all of this will play out. My intuition is that a new type of banking charter will be created that will allow stablecoin issuers to access Fed master accounts and there will be an expectation that stablecoins will hold their reserves there. It also seems reasonably likely that the Treasury gets its way and stablecoin issuers will need to register with the Treasury. I expect that securities regulations may be part of the cudgel that will be used to help ensure that the only stablecoins are the “approved” stablecoins.
The end result of this will likely be that any stablecoin issuer that wants to continue operating would need to become a bank and is going to have significantly less flexibility with what they can do with their reserves. Those that choose not to register or are not approved are likely to have difficulty accessing the U.S. banking system. They may have trouble servicing redemptions, and may perhaps even find themselves aggressively pursued by regulators.https://www.coindesk.com/policy/2021/10/20/what-stablecoins-might-become/
Who knows if the end game is a bank charter but the regulatory solution will undoubtedly shape what stablecoins become. The best solution (I think) will recognise that there is in fact a variety of types of stablecoins offering their users different kinds of promises.
If the answer proposed is a bank charter then it will be interesting to see how bank liquidity requirements might apply to a 100% reserved stablecoin arrangement. The kinds of haircuts that bank liquidity rules apply to liquid assets (other than funds held at a central bank) seem to be completely missing in the approaches currently applied in fiat backed stablecoin arrangements.
Tony – From the Outside