Fed: Stablecoin growth poses structural vulnerabilities

The value of outstanding stablecoins grew roughly fivefold last year, the Federal Reserve said in its 2021 annual report.

Crypto Vulnerabilities: In the report, the Fed said stablecoins have structural vulnerabilities similar to those of other cash-like vehicles, making them susceptible to runs and posing risks to payment and financial systems.

Continued Study: The Fed also said it is studying the implications of crypto and other emerging financial technologies, which have raised fundamental questions about appropriate legal and regulatory safeguards.

ICBA Resources: With policymakers continuing to debate crypto regulations, ICBA offers a summary of President Joe Biden’s executive order on digital assets as well as recent blog posts on the collapse of the TerraUSD stablecoin, its ongoing impact on financial markets, and how it affects community banks and the regulatory debate.