The Fed warns that stablecoins pose a risk to bank deposits

On May 14, information from the minutes of the meeting on April 10 shows that the Advisory Committee on Community Depository Organizations of the Federal Reserve (CDIAC) expressed concerns about the issuance of stablecoins by non-bank organizations. The committee stated that these stablecoins could accelerate the outflow of funds from banks and weaken the lending capacity of community banks to small and medium-sized enterprises as well as households.

The committee compared stablecoins to money market funds in the 20th century, pointing out that they are similar to central bank digital currencies (CBDCs) and could cause a shift in the deposit base of the banking system. In particular, stablecoins are currently not bound by liquidity management requirements like banks, which could lead banks to reduce credit scale, affecting small borrowers.

The commission recommends bringing stablecoin into the framework of stable financial management, requiring uniform standards for both bank and non-bank issuers to prevent regulatory discrepancies. This view aligns with Federal Reserve Chairman Powell on April 16, who emphasized the need to establish an appropriate regulatory system for stablecoin, although he acknowledged their broad appeal.

This information is for market reference only and is not an investment recommendation.

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