Stablecoins are at the forefront of policymakers’ agendas as regulatory pressure increases in the U.S.
Bloomberg reported that officials are creating a policy framework, citing “people familiar” with the matter. This framework will be published in the coming weeks. It stated that their primary concern is to ensure investors have the ability to move money into and out of tokens.
An anonymous source is concerned that crypto assets could be subject to a “fire sale run” and that stablecoins could grow dangerously quickly.
Strengthening regulatory efforts
Financial Stability Oversight Council also prepares a formal review to determine whether stablecoins are an economic threat.
It said that the officials will be focusing on how stablecoin transactions can be processed and settled, and whether market conditions impact them. Tomicah Tillemann is the global head of policy for a crypto fund managed by Andreessen Horowitz.
“It’s significant and very important that we are seeing early steps to establish a regulatory framework for digital assets. This is a huge deal.
When the report is released, it will be sent to President’s Working Group on Financial Markets. This group includes top agency officials like Janet Yellen (Treasury Secretary), Jerome Powell (Federal Reserve Chair) and Gary Gensler (Securities and Exchange Commissioner).
Yellen, who stated that stablecoins are not properly supervised, called for urgent regulation in late July. Gary Gensler agreed with Yellen in early August, saying that regulators need to take action to protect investors against fraud.
In late July, Michael Hsu, Acting Comptroller for the Currency, stated that regulators were looking at Tether’s commercial paper to determine if each USDT token was actually backed by the equivalent one U.S. Dollar.
Tether has given assurances repeatedly that its reserves are fully backed, but has not yet produced an independent audit.
Stablecoin Ecosystem update
According to the Tether Transparency Report, Tether is still the market leader, with a supply of 69.4 million. This is almost the same as the record for USDT which was tapped at 70 billion just this week.
36 billion, or 51.8%, is based upon the Tron network. 33.8 billion, or 48.7%, runs on Ethereum. Since the start of the year, USDT has seen a 232% increase in supply.
After gaining 651% supply growth in 2021, USDC from Circle, a rival stablecoin, currently has 29.3 Billion in circulation.
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