Federal Reserve Governor and former FOMC member Christopher Waller compared decentralized finance (DeFi) with centralized finance (CeFi), asserting that the former cannot completely replace the latter. At the Vienna Macroeconomics Workshop on October 18, Waller also highlighted the potential threats and regulatory challenges of stablecoins, suggesting that appropriate regulations could address these issues.
US Treasury Secretary Janet Yellen and Senator Elizabeth Warren have long pressed for stablecoin regulation. In February 2024, Yellen urged Congress to provide federal authority to regulate stablecoins and their issuers. The Treasury Secretary believed that the new stablecoin legislation could bring financial stability and tighten consumer protection.
In a letter to Yellen, Warren pointed out the significance of including anti-money laundering (AML) policies in stablecoin legislation. Drawing attention to the increasing threats of cryptocurrencies, especially in light of terrorist groups’ reliance on digital assets, Warren highlighted the emergency of implementing new stablecoin regulations.
Crypto enthusiast Walter Bloomberg shared an X post today highlighting the key takeaways of Waller’s speech. Waller stated that stablecoins might have benefits for payment systems, adding that they require regulatory guidance to avoid sudden redemptions. Bloomberg highlighted Waller’s use of terms like ‘may’ and ‘guardrails’ to showcase the Fed Governor’s skeptical approach to stablecoins. In response to Bloomberg’s post, Thinking Crypto’s Tony Edward hinted at the Democrats’ possible discussions on the potential stablecoin policy amendments.
Read also: Yellow Card Raises $33 Million to Expand Stablecoin Access in Africa
Big Statements from Former FOMC member Christopher J. Waller! Janet Yellen made statements about stablecoins yesterday. See what I see? narrative being laid for stablecoin legislation! https://t.co/qEdfXjwaSn
— Tony Edward (Thinking Crypto Podcast) (@ThinkingCrypto1)
October 18, 2024
In addition to stablecoin legislation, Waller highlighted the necessity of regulatory oversight on DeFi. Raising concerns over the risks posed by decentralized systems, he emphasized CeFi’s transparency. He added, “Centralized finance relies on regulatory frameworks to ensure financial stability and prevent illegal activities, and similar guardrails may be necessary in the DeFi space.”
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https://coinniu.com/stablecoin-regulation-heats-up-lawmakers-push-for-guardrails/
