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

Point72 invests $77.5 million in Bitcoin, Morgan Stanley holds $269.9 million

Point72, the $34 billion hedge fund owned by billionaire and New York Mets owner Steven Cohen, held $77.5 million in the Fidelity Wise Origin Bitcoin Fund (FBTC) at the end of the first quarter, according to a recent filing.

Digital Assets

Binance claims Nigerian officials sought $150 million bribe

A Nigerian court has ruled that Tigran Gambaryan, a Binance executive detained on charges of tax evasion and money laundering, can stand trial on behalf of the world’s largest cryptocurrency exchange.

Digital Assets

Kraken reviews Tether listing in Europe ahead of MiCA adoption

Cryptocurrency exchange Kraken is “actively reviewing” whether to delist the stablecoin Tether (USDT) from its European platform, according to a report by Bloomberg.

blockdag

Discover How MoonBag Coin Presale Stacks Up Against Dogecoin & Litecoin

Discover how the MoonBag Coin presale compares to Dogecoin and Litecoin, with unique features, a robust presale structure, and new opportunities in 2024.

Fundamental Analysis, Market News, Tech and Fundamental

Global FX Market Summary: Federal Reserve Policy, USD, May 17 ,2024

Overall, both the Federal Reserve’s policy and the US dollar’s outlook are shrouded in some degree of uncertainty.

Market News, Tech and Fundamental, Technical Analysis

Ethereum Technical Analysis Report 17 May, 2024

Ethereum cryptocurrency can be expected to rise further toward the next resistance level 3200.00, which is the top of the previous impulse wave i.

Digital Assets

Hong Kong adopts digital yuan payments through Chinese banks

Hong Kong has launched a pilot program enabling digital yuan payments through major Chinese banks, marking the first instance of China’s digital currency project being deployed outside the mainland.

Retail FX

Saxo Bank increases client assets five-fold to $116 billion

Copenhagen-based broker Saxo Bank has achieved a major milestone, surpassing $116 billion (DKK 800 billion) in client assets.

Inside View

ISDA says US Basel III “endgame” to heighten market risk capital

ISDA further explained that, by requiring banks to hold additional capital that is misaligned with levels of risk, the proposal would significantly reduce capital market access for US end users and businesses, restrict the ability of businesses to hedge exposures to changes in commodity prices, and increase the cost of everyday consumer goods, including food and gasoline.

<