US Stablecoin Regulation: Bringing Stablecoins Into The Regulatory Fold

On November 1, 2021, the President's Working Group on Financial Markets ("PWG"), joined by the Federal Deposit Insurance Corporation ("FDIC") and the Office of the Comptroller of the Currency ("OCC"), released a report on stablecoins.

The report focuses on stablecoins that are convertible for an underlying fiat currency, as opposed to a smaller subset of stablecoin arrangements that use other means to attempt to stabilize the price of the instrument (i.e., "synthetic" or "algorithmic" stablecoins) or are convertible for other assets. It was released at a time when stablecoins are experiencing rapid, substantial growth in use and distribution. As noted, the market capitalization of stablecoins issued by the largest stablecoin issuers exceeded $127 billion as of October 2021, reflecting a nearly 500% increase over the last year. Accompanying such growth, or perhaps in response thereto, is an increasing regulatory scrutiny of stablecoins and their issuers, as well as