Regulatory pressure is increasing in the US and the US Treasury Department considers stablecoins to be one of the most pressing risks that needs to be addressed as soon as possible.
Referring to “those familiar with the matter,” Bloomberg said officials are creating a regulatory framework that will be released in the coming weeks. Their main interest is to ensure that investors can reliably and safely transfer money to and from tokens. They also fear that “faster sales of cryptocurrencies may jeopardize financial stability, some stablecoins could spread dangerously fast.”
Increasing regulatory efforts in the US
The Financial Stability Board is also preparing a formal review of whether stablecoins pose an economic threat. Officials focus on how stablecoin transactions are processed and settled and whether market conditions affect this. Tomicah Tillemann, Global Director responsible for the development and implementation of strategic plans with regard to regulations in a crypto fund operated by giant Andreessen Horowitz, said:
“It is very important that we are witnessing early steps to create a regulatory framework around digital assets. It’s very important. “
Upon completion, this report was forwarded to the Presidential Financial Markets Working Group. The body includes key leaders such as Treasury Secretary Janet Yellen, Federal Reserve Chairman Jerome Powell and Securities and Exchange Commission Chairman Gary Gensler.
At the end of July, Yellen called for the urgency of regulating stablecoins after stating that they were not sufficiently supervised. Gary Gensler shared the same sentiment in early August, saying regulators must act to protect investors from fraud.
At the end of July, incumbent currency controller Michael Hsu also said that regulators are reviewing Tether’s business documents to see if each USDT token is actually backed by the equivalent of one US dollar. Tether has published the results of two audits, stating that its reserves are fully secured, but has not yet established a full independent audit.
According to the Tether Transparency report, Tether (USDT) remains the market leader with a current capitalization of 69.4 billion. A total of 36 billion, or 51.8%, is based on the Tron network, with 33.8 billion or 48.7% running on Ethereum. USDT’s offer has increased by 232% since the beginning of the year.
Circle’s competitive stablecoin, USD Coin (USDC), currently has 29.3 billion in circulation after gaining 651% in 2021 in terms of supply growth so far.