FRB Governor Waller Supports Prudential Regulatory Framework For Stablecoins

Federal Reserve Board Governor Christopher J. Waller advocated for strong regulatory oversight of stablecoins through a combination of "robust, consistent supervision and regulation and appropriate public backstops," but criticized the approach recommended by the President's Working Group on Financial Markets ("PWG"). As previously covered, the PWG issued a report on November 1, highlighting the financial and economic stability risks posed by stablecoins and providing legislative solutions to address such risks.

In his speech at the 2021 Financial Stability Conference, Mr. Waller asserted that stablecoins are essentially a new version of the bank deposit. He explained that stablecoins "mimic the safe-asset features of commercial bank money" by offering a fixed exchange rate and some form of redemption rights. He noted differences between traditional bank deposits and stablecoins, however, pointing out that stablecoin redemption rights are "not always well defined,"