A Presidency Working Group might issue new recommendations on stable coins. The issuance of stable coins increased considerably in 2021, according to Chainalysis.
The Securities and Exchange Commission (SEC) and the United States Department of the Treasury discuss whether to apply new measures to limit the growth of Tether (USDT) and other stablecoins, or stablecoins.
The reason is that they describe them as a systemic risk to the dollar and the US current economy. The information comes from an investigation made by the information agency Bloomberg, based on consultations with three people who wanted to remain anonymous.
According to Regulators in the United States of America, cryptocurrencies that keep parity with the dollar could represent a threat to the financial stability of that nation.
Bloomberg indicates that the Treasury and other federal agencies are close to deciding whether to launch an examination by the Financial Stability Oversight Board.
This institution can classify companies, as products, as systemic threats to the financial system. Those products or companies who get labeled as threats would face an aggressive set of monitoring by regulators. According to CoinMarketCap, stablecoins have a current market capitalization of more than $ 120 billion.
The stable coin industry belongs to USDT, USD Coin (USDC), Binance USD (BUSD), DAI, TerraUSD (UST), True USD (TUSD), and Pax Dollar (USDP), among others. All of them get ranked in the top 100, according to their capitalization.
Most of these currencies (among these currencies are USDT, USDC, BUSD, and USDP) run in parallel with dollars and other traditional financial instruments such as treasury bonds.
There are also those currencies backed by other cryptocurrencies (DAI, for example) and others without collateral, called algorithmic.
The stable coin index forged by the analytical firm Chainalysis shows that these financial instruments had been facing a constant growth in their capitalization since 2018.
Stable Cryptocurrencies are a Tool That Goes Beyond Traders
These cryptocurrencies arose from the need for some exchanges due to the impossibility of handling fiat money, which is a current need for traders and is now a tool for different purposes.
In some Latin American nations and other parts of the world facing a high rate of inflation, their inhabitants use stable cryptocurrencies to protect their assets.
USDT and other cryptocurrencies that keep parity with the dollar become more and more popular to achieve the exchange of goods and services. A clear example was a Venezuelan who recently purchased an apartment for USD 12,000 with Tether to give it to his mother.
Recommendations on Stablecoins Would Arrive from the Presidency in December
The Bloomberg report, referenced at the beginning of this text, indicates that a Presidency Task Force on Financial Markets, made up of members of multiple US agencies, would issue recommendations on the use of stablecoins in December.
Bloomberg reports the council could now direct federal agencies to intervene in the market. This intervention might reduce the dangers that could represent stablecoin transactions.
By: Jenson Nuñez