Tether, Facebook coin spur worry at Janet Yellen's closed-door meeting

Yellen urged agency heads at the July 19 meeting to "act quickly" to ensure stablecoins face appropriate rules

Tether and the Facebook Inc.-backed Diem token were a main focus of a recent meeting US regulators held on the financial risks posed by stablecoins, a fast-growing corner of the cryptocurrency industry, said people familiar with the matter.

The President’s Working Group on Financial Markets, a team of watchdogs led by Treasury Secretary Janet Yellen, was particularly concerned about Tether’s claims that it holds massive amounts of commercial paper -- debt that companies issue to meet their short-term funding needs, the people said. Participants likened the situation to an unregulated money-market mutual fund that could be susceptible to a chaotic investor