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| Biden government wants to regulate stablecoins |
The US Treasury is urging Congress to pass legislation to subject the issuance of bank-linked stablecoins to federal bank laws, a move that would give regulators greater power over the industry.
The new report from the President's Financial Markets Task Force recommends legislation to protect and address concerns about the risks of payment systems, while also addressing other concerns about systemic risk and the power's economic direction.
A stablecoin is a cryptocurrency that is usually backed by fiat currencies such as the US dollar or the euro. It can also be supported by a basket of investments. Stable coins are mainly used as a means of payment. Its value did not fluctuate much.
According to the new report, the market capitalization of the most popular stablecoins has increased by more than 500% to $127 billion over the past year.
"The rapid growth of stablecoins has increased the urgency of this work," the Treasury said in a statement. In the report, the task force outlined some of the risks that stablecoins could pose to the economy or individual crypto investors.
There are many situations that can cause stablecoins to decline as owners try to mine them in large numbers because they are concerned about the viability of the stablecoins.
For example, if the source of the stablecoin does not fulfill the redemption request. If users lose faith in the ability of the issuer of the stablecoin to redeem it, it can reduce its value.
Stable cryptocurrency provides an option for digital payments
The report says: The decline could extend from one stable currency to another. or other types of financial institutions believed to have similar risk conditions. They can pose risks to the financial system as a whole.
According to the report, only banks are allowed to issue fixed coins. In addition, anyone offering cryptocurrency wallets must accept appropriate federal oversight. The report says that inaction will put many people at risk.
If Congress does not act, the task force recommends that the Treasury's Financial Stability Review Committee take action to identify certain stablecoin activities as systemic risks that could expose them to state scrutiny.
In October, the US Commodity Futures Trading Commission imposed a $41 million fine on the stablecoin Tether. It is about making misleading statements between June 2016 and February 2019. He falsely claimed that his stablecoin was fully backed by fiat currency.