Wall Street's top watchdog won concessions in a debate between U.S. regulators over how to police stablecoins, clearing a path for the Securities and Exchange Commission (SEC) to crack down on the $131 billion market.

Stablecoins play a crucial role in the crypto sphere. Their value is tied to other assets, like the U.S. dollar, and companies typically commit to keeping reserves that ensure investors can exchange the tokens for regular currency. As the sector has grown rapidly, financial regulators have become increasingly concerned about the risks stablecoins pose to the financial system . For example, the market value of Tether has grown to nearly $70 billion this year, up from $21 billion at the end of 2020, according to CoinMarketCap.com. USD Coin, the second-largest stablecoin, increased tenfold, from $3.9 billion last year to $32.6 billion.

Authorities have been already cracking down. In February, Tether settled with the New York Attorney General over allegations that it lied about the reserves backing the coin. Earlier this month, the Commodity Futures Trading Commission (CFTC) ordered Tether to pay $41 million over similar claims.