American University Law Professor: Stablecoins need federal regulation to prevent financial risks

Hilary Allen, a law professor at the American University, pointed out that stablecoins pose a potential threat to the banking system and the public, and advocated for their regulation at the federal level. She warned that stablecoins could lead to bank instability and ultimately require emergency government assistance. The remarks came as the U.S. Congress stepped up its regulation of stablecoins, although the stablecoin bill has little chance of passing in a presidential election year. Financial policy and regulatory expert Marcelo M. Prates believes that stablecoins should be properly regulated, but emphasizes their potential as electronic money, which can help improve financial competitiveness, reduce costs and promote financial inclusion. He suggested that the U.S. federal level formulate three pillars of stablecoin regulation: issuing non-bank licenses, direct access to central bank accounts, and bankruptcy protection of backup assets. This proposal is intended to ensure that stablecoin issuers can operate in a low-risk and transparent regulatory environment, so as to better serve the payment industry and protect consumer rights.