Regulators have long targeted cryptocurrencies. Now they have a new target: the so-called “stablecoins”.
The difference with stablecoins (“stable currencies” in English) is in the name: their value should fluctuate less than other digital currencies because they are pegged to a real-world asset – in many cases, the US dollar.
But a report this Monday (1) from the President’s Working Group on Financial Markets, the Office of the US Comptroller of the Currency and the Federal Deposit Insurance Corporation (Fdic) called on the US Congress to impose rules similar to those of banks on digital currency.
Even with stablecoin’s resemblance to fiat currencies or commodities, regulators believe the risk of not being truly stable, hurting investors and undermining financial security, is still too high, according to a Treasury Department press release. American.
This is a significant move, as stablecoin issuers and providers have been questioned by regulators before.
Tether, for example, the largest issuer of stablecoins, received criticism from the Commodity Futures Trading Commission, which said the company had not fully backed its currencies with dollars for nearly four years.
That means they didn’t have enough dollars on hand to pay back all investors who could potentially redeem their assets.
Regulatory recommendations include requiring stable currency issuers to be insured by the FDIC in the event of a loss, as is already the case with banks in the United States.
Issuers should also have limitations on commercial affiliations with other companies to avoid concerns about a concentration of wealth and influence.
In addition, legislation should require all providers to be subject to federal oversight, as well as ensure adequate standards of risk management.
Companies were quick to respond. “We fully support the call for Congress to act and establish federal banking oversight for the issuance of stablecoins,” said Jeremy Allaire, co-founder and CEO of stablecoin Circle payments platform and operator, in a statement.
“The strategic importance of this for the dollar’s competitiveness in the era of cryptocurrencies and the blockchain is essential,” Allaire added. “It will be a huge step forward in the acceptance of stablecoins and provide a pathway for them to be adopted as a key infrastructure in financial and economic activity for the next decade.”
Reference: CNN Brasil
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