A new Blockchain company, Figure Technologies Inc., and its partners met U.S banking regulators in a bid to prove stablecoin authenticity, amid deep suspicion of the fast-growing sector of the cryptocurrency industry.
According to anonymous sources, officials of the Federal Reserve, Comptroller of the Currency, and the Federal Insurance Corp met the Figure executives as part of efforts targeted at emerging crypto known as the USDF Consortium last week.
The discussion was sparked by the resolve of the President’s Working BBC Group on Financial Markets, which advised that stablecoin issuers become insured depository institutions subject to the same supervision and regulation as banks earlier this month. The USDF effort is one of the first to make the case for stablecoins, which the corporations hope will fulfill unwritten laws, and others are anticipated to follow as government agencies struggle to catch up to a crypto market that has already surpassed $3 trillion in value.
Figure’s general counsel, Ashley Harris, in a statement noted “As the regulation on stablecoin evolves, we believe the USDF Consortium is well-positioned to comply and continue to flourish.” The group’s approach is “compatible with the President’s Working Group’s suggestion that stablecoins be issued only by insured depository institutions from popular stablecoins like Tether and USDC in that it will be produced by banks and backed by dollar deposits in a system that is already regulated by financial institutions.
Customers who desire to use the USDF tokens can deposit money with New York Community Bancorp Inc. and other affiliate banks. Clients can use the markers to pay for transactions that will be recorded on the public Provenance Blockchain, and the banks will issue digital markers related to those deposits.
The consortium’s infrastructure is managed by Figure, a blockchain-lending business. JAM FINTOP, a collaboration between financial-technology firm Fintop Capital and JAM Special Opportunity Ventures, an offshoot of financial-services investor Jacobs Asset Management, is also supporting the endeavor.
The three banking authorities, as well as the markets regulators, the Securities and Exchange Commission and the Commodity Futures Trading Commission, continue to work tirelessly to figure out a cryptocurrency niche. The Financial Stability Oversight Council, a committee of agency heads, is debating whether stablecoins are a serious enough threat to the financial system to warrant involvement.
You would recall that earlier in the month a Treasury Department-led regulatory committee encouraged financial institutions to investigate whether the position of these fast-growing digital assets in the country’s payments system presented a systemic danger, and urged Congress to oversee issuers of “stablecoins,” such as banks.
According to the groups’ report, they implored Congress to impose stronger regulations on stablecoin wallet providers who store the digital currency on behalf of the clients.