Unregulated stablecoins such as Tether face increasing regulatory pressure from the U.S. government
The Stable Act, a new US bill, is messing up the cryptocurrency community. Specifically, unregulated stablecoins like Tether face growing regulatory pressure from the US government.
The Stable Act could put an end to billions of dollars in deals and push the industry back a few years, Tether may face risky
The law calls for banking licensing for stablecoin issuers like Tether. The bill proposes additional reporting requirements by the Federal Reserve. It also recommends release approvals in addition to ongoing audit requirements and an insurance policy to cover properties.
Another suggestion might require stablecoins to store their reserves directly at the Fed. This puts them under the central bank’s control and severely limits their use of openness.
According to a report from Dragonfly Research, the current use of stablecoins could have been concluded that, if the bill passes, it is possible to infer the end of Tether.
The report stated:
“Make no mistake: the day that Tether gets taken down will be apocalyptic.”
Tether is by far the largest and most used stablecoin. Its supply has grown by 410% just this year from a market cap of $ 4.1 billion in early January to $ 20.9 billion.
USDT has been a lifeline for many citizens in countries with hyperinflation or strict currency control. It also helps to promote the development of DeFi along with Ethereum. However, many US agencies and prosecutors are investigating Tether. Companies have so far produced very little protection or audit ways.
The research adds, Tether cannot sustain its monumental growth is unsustainable.
The report concludes that the end of USDT will entail the entire industry.
For now, the Stable Act is just a proposal. For example, it has received criticism from industry leaders and entrepreneurs. They argue that the proposal brings America back to a dark age in terms of innovation and digitization.
However, a recent Presidential Working Group statement bodes poorly for this crypto segment. The statement suggests that all stablecoin holders should be subject to KYC requirements, which indicates that stablecoins are still in the line of fire.
The tether may not be the future of the digital dollar. First, a Companies Registry that becomes the defacto standard is a likely replacement. Then, inevitably there will be more controls and identity checks from governments, banks, and tax authorities. If that is the case, the freedoms we have today with the digital money movement could be a thing of the past.
- Tether Added To The Market Some $1 Billion Worth Of USDT Since Last Month, With Its Market Cap Now Surpassing $16 Billion
- The Tether Treasury Has Minted Almost Half A Billion New USDT And Distributed More Than 185 Million USDT To Exchanges