The cryptocurrency crash that erased around $500 billion in value in the past two weeks has refocused Washington policymakers’ attention speeding up the process to establish federal regulations to regulate the free-wheeling market.
regulations for stable coins
Financial watchdogs are focused on stablecoins — a part of the cryptocurrency that’s designed to provide traders with a refuge from the volatile swings of the overall cryptocurrency market, following the collapse of one known as TerraUSD — which is also identified by its ticker UST — collapsed the last week.
The supporters of the other stable coins claim their coins are built on more solid bases because they hold sufficient cash or other liquid reserves to satisfy any request for redemptions.
Regulators aren’t making such distinctions.
“A lot to be done here, and in the meantime, the investing public is not that well-protected,” Securities and Exchange Commission Chair Gary Gensler said Monday in his address at the Financial Industry Regulator Authority’s (FINRA) annual conference. “We’re going to continue to be a cop on the beat.”
Treasury Secretary Janet L. Yellen told lawmakers this week that the fate of UST underscored the need to allow bank-like requirements to stablecoin issuers in similar to what an advisory panel of regulators led by the Treasury suggested in the fall. However, an official from the Treasury senior official told lawmakers that regulators shouldn’t just wait for legislators to act. “In the absence of congressional action,” the official stated, under anonymity to provide a honest review of the volatility last week, it “will put regulators and stakeholders on a stronger footing if they feel the need to act alone to mitigate the risks.”
It’s not entirely the case that what was the cause of sending UST to its tailspin. Crypto-sleuths have a few theories regarding how the stablecoin, which tried to make use of sophisticated financial engineering to hold the price of $1 fell off its dollar peg then continued to fall. The price was around 10 cents by Monday. This was a drop from close to 20 cents on the weekend. This was after an organization led in the name of UST founder Do Kwon revealed it had sold off 3 billion worth of bitcoin in a failed attempt to stabilize the stablecoin.
Prices for crypto are falling. The future is uncertain.
Kwon on Monday stated that he’s not going to give up and offering the idea of a fresh start to to revive the project. The result was clear enough: The digital similar to a banking rout erased $42 billion in value of coins that were part of the venture, as per to blockchain analytics company Elliptic.
Source was https://www.washingtonpost.com/business/2022/05/16/crypto-crash-regulations/
