The Financial Markets Task Force (PWG), created by United States President Joe Biden, along with the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, released a report on currencies this week. Stable value or stablecoins.
The objective of the report is to demand that the United States Congress regulate the issuers of “stablecoins” and ask financial agencies to find out if the role of these fast-growing digital assets in the country’s payment system poses a systemic risk. .
The stablecoins are tokens crypto linked to the value of fiat currencies. The current stablecoin market is worth nearly $ 130 billion, having multiplied by 20 in the last 20 months, and tether, USD Coin and Binance USD, have skyrocketed 500% to reach a market capitalization of $ 127 billion. In the last 12 months.
These stablecoins are embedded in cryptocurrency trading and lending platforms. Although they only represent around 5% of all crypto assets, in October, more than 75% of operations on all cryptocurrency trading platforms were between a stablecoin and some other token.
The published report defines that “stablecoins, or certain parts of stablecoin deals, can be securities, commodities and / or derivatives.” Therefore, the use of stablecoins presents a number of public policy challenges with respect to investor protection.
Gary Gensler, head of the US Securities and Exchange Commission -SEC- stated that “stablecoins can facilitate those who try to circumvent a series of public policy objectives related to the current traditional banking and financial system: the fight against money laundering, the compliance with tax obligations, sanctions and other safeguards against illegal activities “.
The report claims that the US Congress should require stricter oversight of stablecoin purse / wallet providers that guard digital currency on behalf of clients. This conclusion is likely to disappoint advocates of increased oversight, as it can take years for Congress to pass these kinds of laws.
INA consulted the expert Alfredo Roisenzvit, economist, DeFi expert and CoFounder of MoonQuant Capital, who gave us his opinion on the matter:
The approach taken by the report to the subsequent regulation of stablecoins is reasonable in relation to the risks. As the subject becomes much more known to the uninformed consumer, that is, it becomes mainstream, I think it will be inevitable that the on and off ramps with fiat, plus those that “mix” enough with fiat will be subject to regulation, because it is part of evolution, just as regulation itself is.
What will this regulation be like?
The regulation will finally for these segments are very similar to the fiat financial regulation, which seeks to protect the final consumer, retailer, and the less informed saver. An example is that they already propose that stablecoin issuers have deposit insurance – deposit insurance – like banks.
What then would be the challenge in implementing this regulation?
I think the big challenge they will have for regulation is the truly decentralized part. This I think still has no form within the paradigm of regulators. Until recently I was in there and I think they still “don’t see it.” Most believe that this is another form of asset, and not a different world. This challenge will translate, I think, into a challenge for them not to try to regulate Maker, or DAI, or any other truly decentralized Dao, which they really won’t be able to do.
In my humble opinion, the most that can be achieved, if you understand the bottom line of the paradigm shift, is to agree (with the entire ecosystem) best practice standards (such as the Basel accords) so that Daos can freely implement and thus facilitate the best adoption while still mitigating risks that are real and fairly well identified.