Stablecoin Regulatory Design:  A Logic Model-Based Approach To Drive Public-Private Collaboration

Stablecoins are a type of cryptocurrency whose value is pegged to a reference asset, most commonly the U.S. dollar. While the current role of stablecoins is limited, they promise to play a central role in the future of finance.

Although Congress has yet to pass legislation specifically dealing with stablecoins, some major bills have already been introduced, and some states, notably New York, have already passed legislation to regulate stablecoins. Furthermore the Financial Stability Oversight Council (FSOC) and President’s Working Group (PWG) have already made important contributions to inform how financial regulators should approach stablecoin regulation. Nonetheless, given that a myriad of laws, regulations, policies, and procedures govern how government agencies conduct their business practices, it is often difficult to anticipate the operational impact of changes or additions to them. Federal regulators should continue to discuss how best to coordinate their respective rule-making processes in anticipation of updated obligations from these bills.

In this whitepaper, we introduce a “logic model”-based approach to provide stakeholders greater transparency into the interdependencies, ambiguities, and conflicting authorities that may need to be resolved prior to promulgating new legislation and subsequent regulation. In our view, bodies like the FSOC and PWG approximate the interdepartmental approaches that our logic model is intended to assist with for future stablecoin legislation. We envision a similar structure where individuals represent their departments’ oversight authority while deconflicting overlapping authorities. The logic model can serve as a guided approach to developing this more holistic perspective. Ultimately, we seek to minimize the citizen and industry compliance burden with greater stablecoin adoption while also realizing national interest outcomes.