Is there a need for regulations of Stablecoins such as Tether, USD Coin, Binance USD, or DAI?

The market capitalization of stablecoins issued has been growing rapidly in recent years. There are more than 140 billion USD in stablecoins in circulation worldwide. The potential uses of stablecoins go beyond cryptocurrency trading to include also global payment systems.

Do we need regulations of the stablecoin market to address user protection and financial market stability, or is the market rather better off regulating itself? Can government regulation stop the rapid growth of the stablecoin market, or will it rather inevitably lead to a new ‘offshore financial system’ beyond the control of policymakers? What are the pros and cons of a recent plan by the US Federal Reserve to regulate stablecoins?