A framework for the potential regulation of stablecoins apparently will be proposed by the President's Working Group on Financial Markets during the week of November 1, according to press and other reports. Preliminary information suggests that the PWG will recommend that stablecoins should be regulated like bank deposits held by entities that must apply for a new type of bank charter. However, in the interim, the SEC argues it has existing authority to oversee stablecoins when they look like money market funds because of their investment activities. And let's not forget the CFTC and the NY Attorney General that both have brought enforcement actions during the current and prior three years related to tether. 

Sadly, whatever the recommendation, unless the SEC, CFTC and other regulators provide practical interim guidance, regulatory risk will continue to reign in this space, and important financial innovation will only progress under the sword of Damocles. 

The PWG, was created in 1988 to help "...enhance the integrity, efficiency, orderliness, and competitiveness of our Nation's financial markets and maintaining investor confidence..." It consists of the Secretary of the Treasury, and the Chairs of the Board of Governors of the Federal Reserve System, the SEC and the CFTC.