Wednesday on the Senate floor, Sen. Cynthia Lummis (R-Wyo.) focused her attention on stablecoins, debt, and a U.S. central bank digital currency (CBDC).
“We are 28 TRILLION DOLLARS in debt, and both parties sit here and blame each other for what they BOTH did … it’s unconscionable what we’ve done to the people of this country,” she said as politicians argue over the $3.5 trillion infrastructure bill.
Senator Lummis is pro-crypto and encourages people to buy Bitcoin for retirement. Last month, she attempted to amend the highly controversial crypto broker rule snuck into the $3.5 Trillion infrastructure bill back in August.
“Stablecoins must be 100% backed by cash and cash equivalents, and this should be audited regularly,” she said.
Gary Gensler recently called stablecoins’ poker chips” in the wild west of crypto. While stablecoins aren’t poker chips, the lack of transparency of current stablecoins has caught the attention of regulators everywhere.
Treasury Secretary Janet Yellen has assembled a team to investigate current stablecoins as Government officials continue to raise concerns.
Stablecoins are supposed to be pegged 1:1 to the dollar. However, Tether, the company behind USDT, has faced scrutiny from government officials and die-hard crypto advocates.
Tether is mostly backed by commercial paper and has faced legal issues over its lack of transparency.
The fear of regulation always causes market jitters, with some worried the US government will outright ban it like China recently did. However, when asked whether crypto would be outright banned, Jerome Powell said it wouldn’t be:
“No intention to ban it, but the stablecoins are like money market funds, they’re like bank deposits, but they’re to some extent outside the regulatory perimeter, and it’s appropriate they be regulated,” he said.
Getting the attention of US regulators is both good and bad. The lack of transparency with current stablecoins could be deterring investors from investing in crypto or using DeFi protocols. Once there is some legal clarity surrounding regulation, more large investors and institutions could enter the market which is good for the market as a whole.
The bad news is that regulation causes jitters and short term volatility in the market. However, regulation is coming whether you like it or not and it could lead to a healthier market.
‘The one thing we can all agree on is that stablecoins need to be improved and be more transparent… This is what FluidFi has set out to do, read more about the details of our Stablecoin 2.0, DUSD.
Stay tuned as we continue to monitor how it all plays out.
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