Top stablecoin Tether settled at $1.00 on cryptocurrency data aggregator Coingecko Tuesday, down 1.3%, with USD Coin and Binance USD up 9.8% and 17.5%, respectively, in the last 30 days.
The top three stablecoins have a market cap of more than $100 billion as of Tuesday.
Stablecoins, digital currencies whose value is tied to an external asset, like the U.S. dollar or gold, are increasingly perceived as a potential risk to capital markets.
On Monday, U.S. Treasury Secretary Janet Yellen told regulators the U.S. government must move swiftly to form a regulatory structure for the fast growing class of cryptocurrencies that remain largely unsupervised.
"The secretary underscored the need to act quickly to ensure there is an appropriate U.S. regulatory framework in place," Bloomberg quoted the Treasury Department as saying in a statement after a meeting of the president's Working Group on Financial Markets.
Formed in the Reagan administration in 1988, the group convenes top financial watchdogs, including the U.S. Securities and Exchange Commission, the Federal Reserve and the Commodity Futures Trading Commission.
Fed Chair Jerome Powell told lawmakers during last week's congressional hearings that stablecoins are "growing incredibly fast" but pointed to their lack of transparency and regulation as a point of concern, Reuters said.
"There's not a lot of disclosure about how stablecoins work and what is backing them," Matthew Frankle, a partner at law firm Haynes & Boone LLP, said.
While cryptocurrencies like bitcoin have evolved into investment assets, stablecoins represent a more attractive option for those looking for an electronic form of money that retains a steady value.
Stablecoins are a key source of liquidity for cryptocurrency exchanges, which process trades 24 hours a day. In the decentralized finance markets, stablecoins are used by traders and speculators as a form of collateral.
The Fed is expected to publish a document as early as September providing additional information on emerging payment methods - including central bank digital currencies, stablecoins and cryptocurrencies, The Wall Street Journal said.