Federal Reserve Official Expresses Concerns Regarding Unregulated Stablecoins Such as USDC and USDT

Federal Reserve Official Expresses Concerns Regarding Unregulated Stablecoins Such as USDC and USDT

Concerns Over Unregulated Stablecoins: United States Federal Reserve Official

Michael Barr, a high-ranking official at the United States Federal Reserve, has raised concerns about the increasing use of unregulated stablecoins that are pegged to the United States dollar. In a speech at a fintech conference, Barr stated that if stablecoins gain widespread adoption, they could potentially replace the USD. He highlighted that digital assets like stablecoins pose whole lot of dangers to the financial stability, monetary policy, and the United States payments system. Stablecoins such as USDT and USDC have become integral to the industry of digital currency since their introduction in 2014. USDT, with a market cap of over $83 billion, is the third most valuable digital currency after Bitcoin (BTC) and Ethereum.

Media Criticizes Additional Redactions of Customer Data in FTX Bankruptcy Proceedings

Importance of Stablecoin Adoption in Crypto

USDC, the Second most valuable stablecoin, has seen fluctuations in its market cap over recent months but remains a whole lot of player in the top 10 digital currencies. The adoption levels of stablecoins like USDC demonstrate their significance in the cryptocurrency market, surpassing the value of digital currencies like Cardano (ADA) and Tron. Although while stablecoins operate on public blockchains, their issuance is controlled by private entities and not directly regulated by the Federal Reserve or other worldwide regulators. Barr expressed deep concern in relation to this arrangement, as stablecoin issuance is influenced by demand, potentially leading to instability in the financial system.

Call for Direct Supervision of Stablecoin Issuers

Barr suggested that stablecoin issuers that track the value of the USD should be subject to the direct supervision and authority of the Federal Reserve. Similar to how the monetary authority oversees banks, Barr believes that regulatory control over stablecoin issuers would allow for better control and mitigate probable dangers. By establishing direct supervision, the Federal Reserve intends to address the concerns surrounding unregulated stablecoins and secure the stability of the United States payment system.

How FASB Regulations, Clear Guidelines, and ETF Authorization Could Propel Bitcoin to New Heights

Hot Take

The concerns raised by Michael Barr highlight the  capacity dangers associated with unregulated stablecoins in the United States payment system. As stablecoins gain popularity in the cryptocurrency industry, their unregulated nature poses challenges to financial stability and monetary policy. To mitigate these dangers, direct supervision and regulation of stablecoin issuers by the Federal Reserve could provide a solution. Nonetheless, striking a balance between innovation and regulation remains critical to foster the expansion of the cryptocurrency market while maintaining the stability of the traditional financial system.

Why India’s 1% Tax on Crypto Trades Is Incompatible with High-Frequency Trading, Explains Nischal Shetty
Author – Contributor at | Website

Bitro Conwell stands as an intellectual architect, weaving together the roles of crypto analyst, meticulous researcher, and editorial virtuoso with finesse. Amidst the digital intricacies of cryptocurrencies, Bitro’s insights resonate harmoniously with seekers of all stripes, showcasing a profound understanding. His ability to untangle the most complex threads within the crypto landscape seamlessly pairs his their editorial finesse, transforming intricacy into an artful tapestry of comprehension.

Bloomberg Intelligence Analyst Predicts US SEC Approval for Ethereum Futures ETF Launch Next Week
Read Disclaimer
This page is simply meant to provide information. It does not constitute a direct offer to purchase or sell, a solicitation of an offer to buy or sell, or a suggestion or endorsement of any goods, services, or businesses. Lolacoin.org does not offer accounting, tax, or legal advice. When using or relying on any of the products, services, or content described in this article, neither the firm nor the author is liable, directly or indirectly, for any harm or loss that may result. Read more at Important Disclaimers and at Risk Disclaimers.

Follow us

Latest Crypto News

Share via
Share via
Send this to a friend