The United States is threatening to impose restrictions on the companies behind stablecoins, those cryptocurrencies backed by fiat currency. According to some federal agencies, digital currencies backed by the dollar, such as the USDT, pose a threat to the country’s financial stability.
The United States is considering regulate stablecoins, report our colleagues from Bloomberg. Citing information provided by three people familiar with the matter, the outlet claims that the Treasury Department and other federal agencies are currently preparing to launch “A review by the Financial Stability Supervisory Board”. The review could result in increased restrictions for the cryptocurrency industry.
For the record, a stablecoin is a cryptocurrency backed by a fiat currency, usually the US dollar. De facto, the price of digital currencies guaranteed by a fiat currency (dollar, euro, etc.) is stable. These currencies are impervious to the volatility that characterizes Bitcoin or other cryptocurrencies on the market. To ensure price stability, each stablecoin is secured by a reserve of money, consisting of cash or other assets.
Read also: Mastercard will accept payments in stablecoins
Stablecoins would be a danger to the economy
Stablecoins are essential to the cryptocurrency ecosystem. They allow investors to secure a portion of their earnings when the market turns around, generate high interest and serve as aintermediaries on most trading platforms, including the must-have Binance. Currently, stablecoins in circulation are worth up to $ 120 billion. Among the main stablecoins, we find the USDC, the USDT or even Lugh, the first cryptocurrency backed by the euro.
According to US authorities, stablecoins represent a potential danger to the nation’s financial stability. The US Treasury was mainly interested in the case of Tether, the company behind USDT. To ensure the stability of its stablecoin, Tether relies on corporate bonds. Companies regularly issue debt in the form of bonds. The latest news is that USDT is 9% guaranteed with corporate debt. The United States Treasury fears that a collapse in the cryptocurrency market will harm firms that have contracted debt with Tether.
This turn of the screw follows the pressure from several senators. Recently, Democrat Elizabeth Warren notably demanded that the Treasury Department act urgently and use “Its legal authority to face the risks of cryptocurrencies”. She even wanted the Federal Reserve of the United States to prohibit banks from “hold cash deposits that back up stablecoins ”.
Source: Bloomberg