![]() They should also utilize the concepts of “competitive federalism” and “competitive regulation” to give stablecoin buyers and issuers the choice of a primary regulator.ĭraft legislation from Senate Banking Committee Chairman Pat Toomey (R-PA) is a big step in the right direction. Policymakers should start designing a regulatory framework that focuses on disclosure and the prevention and punishment of fraud but otherwise leaves consumers, entrepreneurs, and investors free to make their own choices and take their own risks. The volatility in the crypto and stablecoin markets should indeed get the proverbial ball moving forward on regulatory policy, but with a focus on the right type of regulation. As does the stifling regulatory framework for stablecoins proposed last fall in the report of the President’s Working Group on Financial Markets (PWG) that would effectively limit stablecoin issuance to large banks. Currently, the arbitrary “ regulation by enforcement” in which the SEC deems cryptocurrencies as “securities” without authority from Congress or even formal rulemaking also creates uncertainty that weighs down the markets. ![]()
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