By Shelly Melancon (Switzerland)
Stablecoins have attracted the attention of US regulators, and they plan to hold a discussion on them on July 19. US Treasury Secretary, Janet Yellen has highlighted the need for synergy among financial regulators in the country with respect to Stablecoins. Most Stablecoins are backed by fiat currencies- like Tether (USDT), which is backed by the US dollar.
While general regulations for cryptocurrencies are still in the works, US regulators have their sights set on Stablecoins as they are pegged to fiat currencies. In light of this, Janet Yellen has stated the stablecoins-based talk is scheduled for July 19. The Treasury Secretary had issued this notice on Friday. As she put it, she said the talk is targeted at an ‘interagency’ cooperation on Stablecoins.
According to reports, the Financial Markets Working Group set up by the US President will convene alongside the Office of the Comptroller of Currency and Federal Deposit Insurance Corporation for the scheduled meeting which is aimed at discussing the pros and cons of Stablecoins. Treasury Secretary Janet asserted that having a comprehensive discussion on this type of cryptocurrency will help regulators determine the effects they are likely to have on users, financial markets and infrastructure. Reports further revealed that the President’s Working group will assess existing policies on Stablecoins, the dangers they pose and deliberate on recommendations in addressing these dangers.
US Fed Chairman Worries Over Inadequate Regulation of Stablecoins
During a meeting with the US Congress on Wednesday, Fed Chairman, Jerome Powell stated his concerns about stablecoins and how they have remained less regulated for long despite bearing similarity to the money market or bank deposits. He acknowledged that stablecoins have grown in leaps and bounds since their inception.
Stablecoins have become necessary tools in the cryptocurrency industry. They are mostly used to buy other cryptocurrencies, though they are also regarded as the best way to hedge against volatility in the crypto market. Most people store a bulk of their funds in stablecoins instead of as deposits in traditional bank accounts.
The market of Stablecoins has grown with Tether (USDT) acquiring the largest share. Other popular stablecoins are the Circle-owned USDC, Binance USD (BUSD) and Paxos-owned PAXG, which is backed by an equivalent worth of gold reserve. Another stablecoin is the DAI backed by Ethereum.
US Senator Issues Deadline to SEC for Crypto Regulations
Anti-crypto Senator Elizabeth Warren issued a deadline to the US Securities and Exchange Commission within which the Commission is supposed to get back to her on crypto regulations. The Senator has always supported a hard line against cryptocurrencies because, as she puts it, they are too volatile. She had called Bitcoin a scam in one of her recent statements.
Twitter founder, Jack Dorsey had unfollowed her on this basis last month. US lawmakers are divided on their positions with respect to regulating the use and adoption of cryptocurrencies. Drawing from this, Hester Pierce, Secretary to US SEC maintained that overregulating the space would stifle innovations in the industry.
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