Does Federal Reserve go hard on stablecoins?
At the start of 2021, Jerome Powell said that the regulation for stablecoins was more important than the issuance of the Fed’s own digital currency, generally known as a Central Bank Digital Currency or CBDC. Now, the president of the Federal Reserve Bank of Boston, Eric Rosengren, has called Tether a “challenge” for financial stability.
The past 18 months have been interesting. During that time, 30% of all dollars currently in existence were printed, and the US Federal Reserve doubled its own asset balance to $8.1 trillion. This has led several economic sectors to overheat. Real estate prices rose by 14% year-over-year in May. However, in his presentation, Rosengren marked Tether, capitalised at only $62.5 billion, as a threat to financial stability.
Tether is issued at a 1:1 ratio to the US dollar and bridges the gap between cryptographic and fiat money. The coin is currently ranked third by market capitalisation.
In the last two years, Tether has come under scrutiny by the Attorney General’s Office of New York. In February 2021, the parties reached an agreement, following which the company provided a report on collateral for its cryptocurrency and the result of an audit done by Moore Cayman. It turned out that the company’s consolidated assets exceeded its liabilities.
However, risks still remain for Tether holders because nearly two-thirds of those assets are commercial papers, the content of which has not been publicly disclosed.
Billionaire Mark Cuban has also spoken in favour of stablecoin regulation after suffering from the collapse of Titan coin, which, together with USDC, formed collateral for the IRON stablecoin. The project’s mechanics initially raised doubts, but those didn’t stop several investors from getting burnt..
We don’t know what the next step will be. Tether is used by the majority of exchanges, including StormGain, as an underlying asset for trading. The attempts to tighten financial supervision or ban stablecoins on American platforms will lead to a drop in prices in the crypto market but will not solve the problems of the United States’ financial system caused by the country’s monetary policy.
Analytical group StormGain
Register in StormGain today and get a 25 USDT bonus here
You can trade SHIBA now in StormGain
Buy, sell and exchange Dogecoin here
The original story was published on the official StormGain site blog
Find all the answers and StormGain community here
Learn about StormGain more on the website: https://stormgain.com/
DISCLAIMER: Any opinions, news, research, analyses, prices, or other information contained on StormGain_crypto is provided as general market commentary and does not constitute investment advice. StromGain_crypto, StormGain, its employees, partners, or contributors will not bear any liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.
The article contains affiliate links.