Stablecoin Regs Demanded If Prices Crash
The price drop of the stablecoin TerraUSD and the collapse of its associated cryptocurrency LUNA has sparked a global call for stablecoin regulation. From the US Treasury Secretary to the Securities and Exchange Commission (SEC) to the Bank for International Settlements (BIS), regulators around the world have raised concerns about stablecoins and the need to enact regulations.
Big tech firms had a quiet week as the UK announced new rules it plans to introduce over the next few months. One of the bills most likely to affect big tech won’t pass until next year.
Financial and banking regulators in Europe and the United States issued statements on non-bank lenders and fair lending, and continued work on bank mergers and artificial intelligence (AI) regulations.
Crypto and stablecoins
TerraUSD’s fall in value has provided some regulators with strong arguments that stablecoins are prone to panic attacks. And a run is what happened earlier this week. US Treasury Secretary Janet Yellen mentioned the collapse of TerraUSD in a hearing before the Senate Banking Committee discussing this report on Tuesday morning (May 10), and used it to refer to the “risk to financial stability” of stablecoins.
Continue reading: The push for stablecoin regulation is gaining momentum as TerraUSD spirals
Pablo Hernández de Cos, Chairman of the Basel Committee on Banking Supervision and Governor of the Bank of Spain, warned on Thursday (May 12) that the rapid developments in decentralized finance (DeFi) and cryptoassets require a proactive and forward-looking regulatory approach . Although some assets qualify as “stable” and “currency,” they often fail on both counts, argued Hernández de Cos.
See more: BIS Committee Chair Questions Crypto Benefits and Calls for Regulation
Also on Thursday, SEC Commissioner Hester Peirce said there could be some movement in stablecoins to enact new regulations. And SEC Chairman Gary Gensler said his agency should address the stablecoin risks as concerns over financial stability and monetary policy mount.
Continue reading: SEC’s Peirce reckons with post-Terra Tumble stablecoin regulations
In the midst of the stablecoin and crypto catastrophe, Coinbase filed with the SEC “to have better access to capital markets quickly and efficiently when needed,” and while the company has no immediate plans to offer securities at this time, Coinbase will The registration could allow Coinbase to quickly list any crypto asset that could be considered a security by the SEC or a court of law on its platform.
See more: Coinbase registers with the SEC to prevent regulatory backlash
The British government announced its legislative agenda for the next parliamentary session on Tuesday. The key piece of legislation for Big Tech is the Online Safety Bill, which aims to curb online harm by vastly expanding Big Tech’s responsibilities to monitor the content posted on their platforms. Other bills like the Brexit Freedom Bill, the Media Bill or the Data Reform Bill will also have an impact on Big Tech.
Continue reading: The Queen’s speech to Parliament highlights new rules for Big Tech
A bill aimed at creating a new tech watchdog with the power to sanction big tech companies when they violate competition and consumer rules is only being discussed as a “bill.” This means that while the government still plans to introduce legislation to bolster the powers of the Digital Markets Unit (DMU), it will do so “in due course” and may not be on Friday (13).
See more: Google’s, Meta Dodge UK’s plan to force fairer deals with publishers
The Office for Consumer Financial Protection (CFPB) issued an advisory statement Monday (May 9) to confirm that banks and other lenders must follow fair lending laws when canceling loans or changing terms, and not just during the application process. Rules apply before and after the bank approves the loan.
Continue reading: CFPB’s statement on fair lending rules could extend to AI
On the same day, the CFPB defended its payday loan rules in court. Industry and trade groups claimed that the payday rules enacted in 2017 conflicted with federal legislative processes and Supreme Court precedent and should therefore be struck down.
See more: Payday lenders face a steep path to voiding CFPB rules
Lending rules may also be subject to regulatory scrutiny in Europe. That The European Banking Authority (EBA) has warned that the largely unharmonized regulatory regimes across Europe regarding non-bank lending can pose challenges for stakeholders, including regulators, and has recommended changes focusing on lending solutions such as “buy now, pay later”. (BNPL) and peer-to-peer (P2P) platforms.
Continue reading: EBA warns against non-bank lenders and recommends regulatory changes
At an event Monday, Acting Comptroller Michael Hsu discussed the need to reconsider how bank mergers are evaluated and directed his team to work with the Department of Justice (DOJ) and other banking regulators to review merger frameworks.
See more: OCC’s comptroller directs staff to review the bank merger framework