Crypto under scanner again as US takes aim at stablecoins

Karthik Subramanian

The US government is looking to regulate and control cryptocurrencies even further as stablecoins seem to be the next ones on the radar for the US Treasury and it is expected that new rules would be setup as early as next week.

Stablecoins are a form of crypto that arose much later than the likes of Bitcoin but have quickly caught the imagination of crypto enthusiasts as their value is pegged to specific national fiat currencies, like the USD, and is also supposed to be backed up with actual fiat reserves. Companies that sponsor such stablecoins, like Tether Limited and Circle are expected to have USD reserves that are equal to the number of stablecoins in circulation and the fact that they are pegged to the fiat currencies but can be moved around very quickly, securely and anonymously has led to it being the preferred form of payments in the crypto industry.

While Bitcoin and other cryptos are subject to a lot of price volatility, stablecoins do not change in value and are not volatile which makes it a darling among the crypto masses. But this is a headache for regulators and authorities as it directly competes with the fiat currencies in terms of utility but with zero regulation or control behind them. Stablecoins like the USDT have billions of dollars in circulation but no one is yet sure on whether they are actually backed by the USD in reality. This opens up the possibility that there could be a bank run and the investors and traders would be left exposed in case there isnt enough USD to back them up.

The US government would be looking to regulate and control the flow of stablecoins and it is also reported that the Treasury would be seeking advice and comments on whether it should launch its own digital currency which can be stored and circulated in digital wallets and this will further reduce the dependence on cash which is fast losing relevance in this increasingly digital world. It could also seek to bring the stablecoins under government control with licensing being required for the same but it remains to be seen how this would pan out and whether the regulators would seek to audit the companies that are sponsoring such stablecoins to ensure that there is enough USD in reserves to back them up.


Read this next

Digital Assets

Crypto exchange Bittrex exits US market amid regulatory woes

Bittrex said on Friday it plans to wind down operations in the United States and voluntarily liquidate because of the uncertain regulatory environment surrounding their business.

Institutional FX

Tradeweb completes integration of Nasdaq’s US fixed income platform

Tradeweb Markets has completed the technology integration of Nasdaq’s US fixed income electronic trading platform, formerly known as eSpeed, which it acquired two years ago in a $190 million, all-cash transaction.

Digital Assets

FTX Europe to allow client withdrawals via new website

The Cypriot unit of failed cryptocurrency exchange FTX has launched a new website that it says would allow customers to withdraw deposits of fiat currency and crypto assets after months of suspension.

Retail FX

Liquidators apply to cancel SVS Securities’ FCA license

An update published today by Leonard Curtis said the UK high court of justice has approve their application to bring the special administration of the failed wealth manager SVS Securities to an end.

Digital Assets

Japan forms government panel to pilot digital yen

Japan’s Finance Ministry has created an advisory panel to look at the feasibility of issuing a central bank digital currency, otherwise known as “CBDC”.

Digital Assets

USDC sees massive $10.4 billion outflows in March

Cryptocurrency traders have withdrawn more than $10 billion from the world’s second largest stablecoin, USDC, in less than three weeks even as concerns over the fallout from the Silicon Valley collapse have receded.


OSTTRA’s Joanna Davies goes beyond 30-30-30 data standard at FIA Boca 2023

FinanceFeeds Editor-in-Chief Nikolai Isayev spoke with Joanna Davies about OSTTRA.


CloudMargin’s Stuart Connolly on how to manage collateral amid high rates at FIA Boca 2023

FinanceFeeds Editor-in-Chief Nikolai Isayev spoke with Stuart Connolly about CloudMargin’s SaaS platform, said to be the only cloud-native collateral and margin management system in the industry, at a time of stress due to rising interest rates.


Baton Systems’ Alex Knight on solving post-trade with DLT at FIA Boca 2023

FinanceFeeds Editor-in-Chief Nikolai Isayev spoke with Alex Knight about Baton Systems’ about rising settlement fails, collateral management, and the profile of DLT beyond cryptocurrencies.