The Federal Reserve and Yale University jointly formulate stablecoin regulatory guidelines: or make stablecoins equivalent to public currencies

The Federal Reserve's ongoing CBDC research has included stablecoins and corresponding regulatory issues. Yale University professor Gary B. Gorton and Jeffery Zhang of the Federal Reserve System's Board of Governors published a paper on Sunday titled "Taming Wildcat Stablecoins," which formulated two regulatory guidelines: making stablecoins equivalent to public currencies; or introducing CBDCs and squeezing the living space of private stablecoins through taxation.

Regarding the first option, the government can require banks insured by the Federal Deposit Insurance Corporation (FDIC) to issue stablecoins, or require that all stablecoins be fully collateralized by Treasury bonds at the Federal Reserve. The paper points out that "privately produced currencies" such as stablecoins are not effective mediums of exchange because they are not always accepted at face value and there is a risk of bank runs, which in turn creates systemic risks.

The paper mentioned that starting from July 19, Treasury Secretary Yellen will convene the President’s Working Group on Financial Markets to discuss stablecoins. The group brings together various regulators to assess the potential benefits and risks of stablecoins.