Crypto regulation returned to the front page this week, with regulators in the US and around the world reviewing stablecoins and discussing potential policies to govern these types of cryptocurrencies.
regulations that will soon come to light could affect the liability that issuers must provide and the rights of their customers.
Possible regulations could reduce the threat that stablecoins pose a systemic risk to the financial system or could make the situation worse.
Fed is not a fan of Cryptos
Jerome Powell, the chairman of the Federal Reserve, was on Capitol Hill recently giving testimony in Congress, and it’s pretty clear that he doesn’t like digital currencies, especially stablecoins.
Fed chief said the main motivation for the United States to establish its own central bank digital currency would be to end the cryptocurrency use case in the United States. He realized this during a two-day Congressional hearing.
Powell said you don’t need stablecoins or cryptocurrencies if you have a US digital currency, noting that this is one of the strongest arguments in its favor.
Stablecoin threatens stability
For years, central bankers and US lawmakers have lamented the rise of stablecoins, a particular subset of cryptocurrencies designed to link to a real-world asset, such as a fiat currency like the US dollar or a precious metal. like gold.
se digital tokens are increasingly used in national and international transactions and threaten the new central banks because they cannot regulate this space.
President’s Task Force for Financial Markets met to discuss stablecoins a few days ago, marking the first publicly announced meeting of this group of regulators since Joe Biden took office.
Appropriate frame for stable coins
Janet Yellen, the United States Secretary of the Treasury, informed regulators, the government should establish and implement a framework for digital currency stablecoins.
According to a Treasury Department statement, US officials are confident of presenting recommendations to seal the regulatory holes surrounding stablecoins.
Yellen’s conference with the President’s Working Group (PWG) on Financial Markets brings together financial sector regulatory consultants to discuss key issues. meeting focused on the importance of the eCurrency rules for stablecoins, set in the valuation of traditional currencies such as the US dollar.
It’s unclear whether the Fed will liquidate private stablecoins, a central bank-issued digital currency, or both. So even if the rest of the world is waiting for answers, decisions must be made quickly.
Tether, the most common dollar coin, is owned by Hong Kong-based iFinex Inc. Each country could decide that its cryptocurrency or fintech company reflects its official unit of account. Trying to regulate entities once they are already huge to fail would be pointless.
Wayne is a Blockchain enthusiast and cryptocurrency trading expert. Currently, he deals with trending topics in digital currencies.
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