Paradigm has published an article on its official website regarding policy recommendations for stablecoins. According to the article, stablecoins are considered to have lower risks compared to traditional bank deposits. The risk management framework for stablecoins should be designed to address the unique risks associated with stablecoins, which are different from the risks observed in the traditional banking industry. Unlike money market funds (MMFs) in practice, treating stablecoins as MMFs for regulatory purposes would result in the loss of utility for most stablecoins.
Their recommendations advocate for advancing stablecoin legislation through three key aspects:
Require center issuers of stablecoins pegged to the US dollar to meet appropriate risk management standards.
Prioritize orderly and effective competition between stablecoins and related services, as well as with existing banks.
Enable consumers and businesses to access a wide range of payment and related services while ensuring baseline security requirements are met.
At last, Paradigm urges Congress to take immediate action in enacting legislation to address the risks posed by stablecoin arrangements while still allowing payment stablecoins to function and continue innovating.