Cryptocurrency has become a focus of some Congressional testimony’s. Stablecoins are coins that are pegged to another asset, typically currency such as the US dollar or Euro. In this way, stablecoins should theoretically avoid much of the volatility that exists in the crypto market. However, Crypto is not always stable, as the GYEN coin proved. Many consumers, however, look to stablecoins as a less risky proposition. Some stablecoins also purport to be backed by other assets, which gives a further sense of security. Overall, in many respects, stablecoins look and seem to consumers less like a risky bet and more of a sure thing.
In many ways, this makes them more ripe for regulation, as people may be taking on more risk than they believe. Additionally, due to their often stable nature, they can play more of a traditional currency role than the coins that frequently fluctuate, which creates further reason for regulation. In a recent House Financial Services Committee hearing, a Treasury department official reiterated the Biden administration’s recommendations to limit issuance of these coins to FDIC-insured banks, with additional regulation for intermediaries of these coins. This would be a significant change from the status quo. Regardless of whether this recommendation is implemented, it appears increasingly likely that stablecoins will become among the more regulated of NFTs, tokens and cryptocurrency.
Congressional testimony suggested Congress pass a law that would allow the CFTC to regulate cash markets for certain types of cryptocurrencies—currently the agency is limited to regulating derivatives—and provide it with funding to conduct additional oversight. Congressional Members introduced three different types of bills focused on (1) cryptocurrency regulation, (2) applications of blockchain technology, and (3) central bank digital currency (CBDC). The first set of bills mainly focus on how regulatory agencies such as the Securities and Exchange Commission (SEC) and Commodities and Futures Trading Commission (CFTC) will regulate crypto and blockchain tokens
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