(Bloomberg) — The U.S. Treasury’s top official for financial oversight said government regulators need action from lawmakers to adequately protect investors — and the wider financial system — from risks posed by stablecoins.
“If Congress does not enact legislation, the regulators will try to use what authority they have,” but they will be left without sufficient oversight powers, Nellie Liang, the Treasury undersecretary for domestic finance, said Friday in an interview with Bloomberg News, referring to what agencies can do without congressionally mandated authority.
Investors in the cryptocurrency space often use stablecoins to get in and out of trades, using them as a digital form of money, highlighting the importance of their regulation.
Liang, who formerly led the Federal Reserve’s financial-stability division, said of regulators: “They can do a little here and a little there, but if these are foundational to crypto assets and they aren’t stable, that could potentially be a big risk.”
She spoke shortly after a panel of top federal regulators released its annual report outlining threats to the U.S. financial system. In that report, the Financial Stability Oversight Council said it is prepared to take steps on its own to address stablecoins if Congress fails to pass legislation.