The White House issued a statement clarifying five major issues in stablecoin regulation

Today, the President’s Working Group on Financial Markets (PWG) released a report titled “Statement by the President’s Working Group on Financial Markets on Key Regulatory Issues Related to Stablecoins”, which identified five major issues: innovation, regulation, compliance, legal basis, and additional protective measures.

It mentioned that: the regulation of stablecoins can be based on federal securities, commodities, and derivatives regulations; it is recommended that stablecoins be supported by a 1:1 reserve asset value; clear information disclosure should be made for stablecoin projects, and stablecoin projects also need to obtain and verify the identities of all trading parties and monitor transactions; for stablecoins anchored to multiple currencies, more restrictions may be required, etc.

The clarification and clarification of the key regulatory issues of stablecoins by the United States is a double-edged sword: the regulatory rules have become clearer and the information on stablecoin activities has become more transparent, but at the same time, the user's transaction information and identity privacy will be completely exposed to supervision. Bibi News extracted the main part of the "Statement" and translated it as follows:

The United States encourages responsible innovation in payments . Digital payments, including dollar-backed and other stablecoin projects used as payment systems, have the potential to improve efficiency, increase competitiveness, reduce costs, and promote broader financial inclusion. Digital payment systems, including stablecoin projects, should be designed and operated in a responsible manner to effectively manage risks and maintain the continued stability of the U.S. domestic and international financial and monetary systems.

Stablecoin projects must comply with applicable U.S. laws and regulatory requirements. These requirements can help achieve a range of policy objectives, including (maintaining financial) safety and soundness, combating illicit financing, protecting end users, and (ensuring) market integrity. In particular, stablecoin projects with greater potential scale, complexity, and interconnectedness should consider and manage any higher risks to participants, end users, and the broader financial system. Stablecoin projects should be subject to the same requirements as other projects that perform the same functions and activities and pose the same risks, in order to comply with the general principle of "same business, same risks, same rules".

Before launching to the market, stablecoin participants and stablecoin projects must meet all applicable anti-money laundering and counter-terrorist financing regulations, as well as comply with sanctions obligations. In the United States, these obligations include registering with the Financial Crimes Enforcement Network (FinCEN); developing, implementing and maintaining an effective anti-money laundering program; (complying with) recordkeeping and reporting requirements, including reporting suspicious activities, and customizing risk-based sanctions compliance programs.

The Financial Action Task Force (FATF) standards stipulate that anti-money laundering, counter-terrorist financing, and counter-proliferation financing mechanisms apply to digital assets, including stablecoin projects, and their service providers. The standards require the public and private sectors to conduct adequate risk assessments to understand the risks of digital assets. The United States functionally regulates digital assets, including stablecoins and digital asset service providers, under anti-money laundering, counter-terrorist financing, and sanctions mechanisms, which is consistent with the FATF standards. The United States also expects that (stablecoins) will implement compliance procedures designed to meet these obligations before they are brought to market.

Depending on their design and other factors, stablecoins may constitute securities, commodities, or derivatives subject to U.S. federal securities, commodities, and/or derivatives laws. As such, the federal securities laws and/or the Commodity Exchange Act will govern stablecoins, stablecoin transactions, and/or participants therein. Whether a stablecoin is a security, commodity, or derivative will depend on the relevant facts and circumstances.

When stablecoins, primarily used for retail payments, are adopted at scale in the United States, the associated risks may mean that these scenarios require additional safeguards. We encourage relevant participants in stablecoin projects and their functional, operational, trading, and risk management design to adhere to key principles, including:

• To promote financial stability, stablecoin projects should be designed to address potential financial stability risks, including large, potentially disorderly redemptions and general business losses. Stablecoin projects should have appropriate systems, controls, and operations to manage these risks, including protection of reserve assets.

Strong reserve asset management measures include ensuring 1:1 reserve asset support and sufficient funds to absorb losses and meet liquidity needs. Stablecoin projects backed by the US dollar should hold high-quality US dollar-denominated assets; store these assets in US-regulated entities; use multi-party custody; and limit debtors to high-quality debtors to ensure investment security.

• To protect end users and in accordance with the principles of fair and transparent financial services, stablecoin projects should provide enforceable direct claims by holders against the issuer or reserve assets to ensure that holders can promptly redeem stablecoins 1:1 for the underlying fiat currency (net of fees). Stablecoin projects should clearly disclose the rights of stablecoin holders. Claim procedures should minimize counterparty risk for stablecoin holders, including ensuring that reserve assets are held in a manner that is insolvent and protected from other creditors of stablecoin project participants.

Clear information disclosure should be made to promote transparency and improve the end-users' right to know. Disclosures should include the operation and governance structure of stablecoin projects, for example, providing the functions and activities within the stablecoin project, who is responsible for these functions and activities, detailed financial information supporting the value of the stablecoin, and a description of any fees, foreign exchange risks, and potential conflicts of interest of participating entities. Stablecoin projects should provide clear processes around problem solving, protecting users from unfair or fraudulent practices, and protecting user data.

• To promote market integrity, stablecoin projects must meet all applicable AML/CFT and sanctions obligations. Stablecoin projects designed for anonymous or pseudonymous transactions may attract illegal persons and, without appropriate mitigation measures, may allow key public policy objectives to be circumvented. Like other entities subject to AML/CFT and sanctions obligations, stablecoin projects must conduct user authentication and risk assessments, monitor trading activities, provide records to authorized institutions (such as regulatory and law enforcement agencies) and maintain records for AML/CFT purposes, report suspicious activities, screen for sanctions obligations, etc.

Before a stablecoin is brought to market, providers must implement compliance with the AML/CTF requirements for the stablecoin project and update (requirements and behaviors) as circumstances change. Individual mitigation measures will vary, but must include an assessment of risk, regulatory compliance, and an effective AML/CTF compliance program. In addition, stablecoin projects should be able to obtain and verify the identities of all transaction parties, including those using non-custodial wallets.

• To improve operational resilience, stablecoin projects should adopt a sound risk management framework. Stablecoins should ensure a high degree of security and operational reliability, including cybersecurity, and should have sufficient scalability capacity. Stablecoin projects should have reliable data collection, storage, and protection systems. Business continuity management (rules) should be reasonably designed to ensure full and rapid resumption of operations and fulfillment of obligations in the event of disruptions.

• In order to promote the sound operation of payment and trading markets, stablecoin projects should set up data management systems to record and protect data and information collected and generated in operations. Reliable procedures should also be adopted to record, retain and report real-time data, including price and transaction information, for dissemination to market participants and regulators.

• To promote macroeconomic and international monetary stability, stablecoin projects should not undermine citizens’ confidence in domestic fiat currencies and the stability of fiat currencies. In the United States, additional restrictions may be necessary for stablecoins that are not redeemable 1:1 with the underlying fiat currency (net value after deducting fees) or that determine their value through more than one fiat currency (e.g., stablecoins pegged to multiple currencies).

• To facilitate comprehensive cross-border supervision, stablecoin projects operating in multiple jurisdictions should provide necessary information and documents directly to all relevant national authorities. Authorities may establish cross-border information sharing mechanisms to facilitate supervision and establish other mechanisms to ensure compliance and enforcement. In the United States, stablecoin projects may need to establish entities within the country, use U.S.-regulated entities as intermediaries, and/or consider other factors.

Conclusion: PWG wrote in the report, "This is a preliminary assessment of key regulatory issues regarding certain stablecoins. It welcomes dialogue on this statement. U.S. authorities are continuing to evaluate the technology, market environment and regulatory framework related to stablecoins." Regulation of the crypto industry is always on the way.