Stablecoins bear a risk to the financial system, said the head of the US Consumer Financial Protection Bureau, according to Bloomberg.- The bureau's new chief, Rohit Chopra, voiced the warning during his first appearance on Capitol Hill since confirmation.
Stablecoins bear a risk to the financial system as more payment and technology companies move to embrace digital coins, said the head of the US agency set up to advocate for consumers, according to a Bloomberg report.
The remarks come as regulators take a more active approach to cryptocurrencies, with key reports laying out roadmaps also expected soon.
"Stablecoins are right now primarily used for speculative purposes," Rohit Chopra, director of the Consumer Financial Protection Bureau, said at a House Financial Services Committee hearing Wednesday. "But one could imagine that if it starts riding the rails of some of the large networks or big tech companies it could scale very, very quickly."
Stablecoins are a type of cryptocurrency that's pegged to an asset such as a fiat currency, government bonds, or a precious metal.
Chopra made his comments during his first appearance before Congress since he was confirmed to the post late last month.
His testimony also arrived as the Securities and Exchange Commission has secured authority to oversee regulation for the $131 billion stablecoin market, according to a Bloomberg report on Monday. Meanwhile, the head of the Commodity Futures Trading Commission said Wednesday it should be the main agency to oversee cryptocurrencies, rather than the SEC.
Officials are concerned about a surge in public adoption of unregulated coins, and Chopra said the CFPB will analyze and collect data about how companies like Facebook plan to use tokens as part of a broader look into how technology giants use and market consumer data.
Facebook recently launched a digital cryptocurrencies wallet called Novi, whose users will be able to transact paxos dollar or USDP, a stablecoin created in 2018 that's pegged to the US dollar.
And Mastercard recently reached a deal with the crypto firm Bakkt to make it easier for consumers to spend cryptocurrency rewards on the payment firm's network.