The Federal Reserve's Community Depository Institutions Advisory Committee (CDIAC) is advocating for stricter regulations on stablecoins to protect traditional banks from potential risks.
The committee is concerned about stablecoins' ability to encourage deposit withdrawals, similar to the challenges posed by money market funds in the past.
Chairman Jerome Powell emphasizes the need for an integrated regulatory framework to maintain financial stability and safeguard lending capacities, especially for smaller borrowers.
As Congress moves forward with the "GENIUS Act," the urgency for proactive regulation is highlighted to prevent disruptions in the banking sector.
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