Stablecoin Rules Are a Hot Topic for People in Money Markets

  • Funds face new round of SEC clampdowns to avert market turmoil
  • Stablecoin issuers hold similar assets, face fewer disclosures
Terra stablecoin pricing on the DeFi Llama website on a laptop computer arranged in the Brooklyn borough of New York, US, on Monday, May 16, 2022. The collapse of the Terra ecosystem, and the tokens Luna and UST, will go down as one of the most painful and devastating chapters in crypto history.Photographer: Gabby Jones/Bloomberg
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Money-market funds -- facing a third round of industry clampdowns since the financial crisis -- are wondering whether Washington should pay more attention to less transparent investment vehicles to avert turmoil in short-term lending markets.

Cryptocurrency stablecoins, for example, are often backed by assets including Treasury bills and short-term corporate IOUs. They have been referred to as money-fund-like instruments, but aren’t held to the same disclosures and requirements as the $4.5 trillion industry, according to some money managers speaking at the Crane’s Money Fund Symposium in Minneapolis on Tuesday. That mismatch could pose a risk to financial market stability with digital-asset prices tumbling, they say.