Stablecoin regulation seems imminent in the U.S. for next year. What does this mean for the crypto space?
), for instance, had claimed that its stablecoin “was backed 1:1 by cashlike holdings” but then it came out that “40 percent of its holdings were actually in U.S. Treasurys, certificates of deposit, commercial paper, corporate bonds and municipal debt,” as the New York TimesIn the past three months, a kind of “public hype has entered a new level,” continued Grey, including celebrities promoting crypto assets and nonfungible tokens, or NFTs. All these things nudged regulators further along.
and also suggested in some legislative proposals like the 2020 Stable Act which Grey helped to write.testified It’s the reason traditional commercial banks are required to buy FDIC insurance through premium assessments on their domestic deposits. But, if stablecoins limited their reserve assets to cash and genuine cash equivalents such as bank deposits and short-term U.S. government securities they arguably avoid the “run” risk and don’t need deposit insurance, she contends.
“I think there are positives and negatives if stablecoin issuers are required to be insured depository institutions ,” said Banaei, adding: “For example, an IDI could issue FDIC-protected stablecoin wallets. On the other hand, fintech innovators would then be compelled to work with IDIs, making IDIs and their regulators effectively the gatekeepers for innovation in stablecoins and related services.
Landy is more skeptical on this point. “The word ‘stablecoin’ is hated in the regulatory community,” he told Cointelegraph and might be jettisoned if and when stablecoins come under U.S. government regulators. Why? The very name suggests something that stablecoins are not. These fiat-pegged digital coins are anything but “stable” in the view of regulators. Calling them such could mislead consumers.Additional matters need to be sorted out too.
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