The President's Working Group on Financial Markets, along with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency wants Congress to enact legislation to ensure that payment stablecoins and payment stablecoin arrangements are subject to a regulatory framework, the report says. Stablecoins, a digital fiat currency, such as Tether (USDT-USD) and USDC (USDC-USD) have exploded 500% to exceed a $127B market cap over the past year, according to the report. "Failure to act risks growth of payment stablecoins without adequate protection for users, the financial system, and the broader economy." Just like traditional banks, payment stablecoins face credit risk, liquidity risk, operational risk and settlement risk. "When not managed comprehensively, these risks can make payment systems less available and less reliable for users, and they can create financial shocks or operate as a channel through which financial shocks spread." In October, Fitch Ratings warned that
