Consumer Financial Protection Bureau (CFPB) Director Rohit Chopra said the agency will be taking action on stablecoins, according to a press release.
The director’s statements come after a Report on Stablecoins was issued by the President’s Working Group on Financial Markets, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation, the release stated.
The CFPB has gotten input from the public on the ways Big Tech companies might leverage their online platforms to scale digital payments like cryptocurrency, according to the release.
“Our solicitation for input follows the agency’s recent issuance of orders to Google, Apple, Facebook, Amazon, Square and PayPal regarding their payments-related plans and practices,” Chopra said in the release. “As the Report on Stablecoins notes, established players with large user bases could accelerate the adoption of stablecoins as a payment device, and lead to an excessive concentration of market power.”
Stablecoins attached to the U.S. dollar have been boosted by almost 500% and are now sitting at around $128 billion, the release stated. The CFPB is looking into the larger adoption of crypto by the public, following the mass popularity over the course of the past year or so.
“The report highlights how stablecoins could be vulnerable to runs and fire-sales in ways that could create stress on the broader financial system absent adequate oversight,” Chopra said in the release.
Stablecoins are mostly used for speculative trading in crypto, but they can also be used with consumer deposits, stored value instruments, retail and other consumer payments, according to the release.
Chopra said in the release that with the mass growth of stablecoins, the CFPB will be engaging with other members of the Financial Stability Oversight Council, looking into “whether to initiate designation proceedings and ascertain whether certain nonbank stablecoin-related activities or entities are systemically important.”
The Report on Stablecoins shows there’s a need for some legislation to make it so banks are in the mix to issue the coins.
Read more: Only Banks Should Issue US Stablecoins
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