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"Major Milestone: U.S. Regulators Publish Guidance on Stablecoins""America's Major Regulators Gather to Discuss Stablecoins Next Week"Yesterday (July 19), the Federal Reserve’s ongoing research on central bank digital currency (CBDC) has expanded its scope to include stablecoins and explore whether they can be effectively regulated. Earlier news,
From the 19th, Yellen will convene the President's Financial Market Working Group to discuss stablecoins
The discussion on stablecoins has heated up recently, with Federal Reserve Chairman Jerome Powell calling for stricter regulations on assets such as USDT. On July 15, Powell said that it has not yet been decided whether the central bank's digital currency will do more good than harm. A more immediate approach would be proper regulation of stablecoins. The Fed wants Congress to support central bank digital currencies. “Our responsibility is to explore technical and policy issues and make informed recommendations on central bank digital currencies. Keep an open mind on the issue of central bank digital currencies.”
Since the birth of Tether in 2015, stablecoins have come into everyone's attention, and the real large-scale and wide-ranging application of stablecoins will begin with the support of USDT by the three major exchanges in 2017. Tether claims that each USDT is backed by 1 USD, and each USDT can be accepted and redeemed through the Tether platform. Since then, more stablecoins such as GUSD, PAX, TUSD, and USDC have appeared in the market one after another with a 1:1 exchange rate. Among them, GUSD and PAX are the first batch of stablecoins recognized by the government announced by the New York State Financial Services Authority in September 2018. However, USDT still occupies a monopoly position in the market due to its preemptive opportunities.
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The attitude of the United States towards stablecoins
The attitude of the United States towards stablecoins has always been in a delicate state. Generally speaking, it is not exclusive, and even helps its development. On the one hand, out of confidence in the national monetary system, most lawmakers believe that the regulated stablecoin can take on the function of a new payment tool; on the other hand, to some extent, the stablecoin can also help the dollar penetrate into other countries and regions.
South America was hit hard by the coronavirus in the first half of last year. Due to the Trump administration's control over Venezuela's import and export markets, many anti-epidemic supplies cannot reach medical staff. At that time, the more popular digital currency payment platform Airtm appeared. This is a P2P digital currency service platform headquartered in Mexico. AirUSD is a token linked to the US dollar on the platform. As long as the USDC received by the aid is transferred to the Airtm wallet, AirUSD will be generated and distributed to the accounts of medical staff. The received AirUSD can be traded freely without going through a Venezuelan local bank. Now Caracas, the capital of Venezuela, has formed a dollar-based market economy, and many merchants quote in dollars.In January of this year, the OCC announced on its official website that it would allow Bank of America to use public blockchains and dollar stablecoins as settlement infrastructure in the U.S. financial system.
This means that a decentralized, permissionless open source and Internet-mediated public blockchain can become the foundation of the U.S. financial system and the global economy, marking a new beginning for stablecoins and the entire cryptocurrency industry.
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The Stablecoin Landscape Has Quietly ChangedAccording to the DAppTotal stablecoin data, at the end of 2017, USDT was issued to 1 billion; after the "3.12" market plunged, some people needed to withdraw money because of risk avoidance, and some people wanted to enter the market to buy bottoms. The demand for deposits and withdrawals stimulated the additional issuance of USDT , Within a month, the additional USDT issued quickly rose to 7 billion pieces; on January 1 this year, the total market value of USDT was about 21.111 billion US dollars, and as of April 12, its market value was about 44.699 billion US dollars, which means that USDT in three Within a month, 23.888 billion new coins were added, and the circulation has exceeded the total additional issuance in the previous 7 years.
Since June, the USDT issuance has remained unchanged at 64.25 billion, and as of today, there has been no additional issuance for 50 days.
According to analysts and market participants, USDT has been challenged on both fronts due to China's crackdown on cryptocurrencies and mounting regulatory pressure from around the world, and as more compliant rival USDC is scrambling to gain market share.
As early as 2019, the United States had "strike hard" against USDT. Due to the opaqueness of USDT, it is widely used in financial crimes such as money laundering, and Tether has no official third-party audit to prove that USDT is always anchored to the US dollar at a ratio of 1:1, and random additional issuance has brought huge hidden dangers to the market. In April 2019, New York State Attorney General Letitia James announced that iFinex (Tether's parent company) and Tether were prohibited from conducting virtual currency activities that endanger investors. The sanctions dampened the market value and morale of USDT for a short time, but Tether did not escape. It issued an announcement on its official website saying that the New York State prosecutors belonged to "maliciously written content" and had no law enforcement power. Take steps to remediate these funds. At the same time, Tether also admitted that only about 74% of USDT is currently backed by cash and short-term bonds. It is said that USDT has revised its terms of service from "1:1 pegged to the US dollar" to "75% US dollar anchor and 25% iFinex stock secured loan" in March 2019.Under the bull market in the first half of this year, the pattern of stablecoins seems to have changed. In the field of DeFi, USDC has surpassed USDT.
In early July, Stani Kulechov, the founder of Aave, shared pictures on Twitter and said: "60% of DAI (encrypted native stable currency) is backed by USDC"; Messari analyst Ryan Watkins listed the data and said: "USDC is rapidly becoming Ethereum's The dominant stablecoin on the market, more than 50% of USDC (approximately 12.5 billion US dollars) supply has entered smart contracts.” listing plan. USDC may not qualify as a "decentralized" coin, but it's clearly a good USD stablecoin.
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CBDC for StablecoinsFrom the perspective of "centralized supervision", no matter how good the stable currency is, it is also a "risky" token compared to CBDC. In the context of the development of central bank digital currency (CBDC) in various countries, "threat theory" is also rising and falling in the parliament, believing that the digital renminbi of other countries has brought challenges to the dominance of the US dollar in payment. How to find a new way out? It's an issue the Fed is discussing.
The congress, starting on July 19, will be a turning point for a digital dollar towards a CBDC or a stablecoin.
We currently have the following news:"According to a Reuters report, on June 28, Randal Quarles, the Fed’s vice chairman for supervision, said that any proposal to create a U.S. CBDC would have to clear a “high bar” and that he needed to be confident that the potential benefits would outweigh the risk. “Before we get lost in the novelty, I think we need a careful critical analysis of the promise of a CBDC.” Quarles argues that the U.S. dollar is already “highly digitized,” and that some of these issues are better addressed by other solutions, such as To improve access to low-cost bank accounts, we don’t need to be afraid of stablecoins, the Federal Reserve has historically supported responsible private sector innovation; Richmond Commonwealth Bank President Thomas Barkin expressed similar skepticism, “We are The country already has a digital currency called the U.S. dollar.” They may not all be supporters of stablecoins, but to some extent represent the side of the non-essential view of launching a CBDC."Federal Reserve Governor Lael Brainard is a CBDC advocate and has asserted that a leading CBDC project could have a negative impact on the global financial system.
Tremendous influence
. A CBDC could provide the utility and benefits associated with existing dollar stablecoins without undermining government control over monetary policy. “Unlike central bank fiat currencies, stablecoins do not have legal tender status, but there is a risk that widespread use of private currencies for consumer payments could decentralize parts of the U.S. payments system, leaving households and Businesses are burdening and driving up costs."
Federal Reserve Chairman Jerome Powell appears relatively neutral. The Federal Reserve will release a research white paper on CBDC in September this year. Currently, the Federal Reserve’s Boston branch is conducting research with the Massachusetts Institute of Technology on technologies that can be used for digital currencies. Powell still made it clear that the central bank will not be able to launch a digital currency without Congressional action.
Previously, Powell said in a video speech in May: "The Fed's focus is to ensure a safe and efficient payment system that can bring broad benefits to American households and businesses, while also embracing innovation. With the dollar or another legal currency Pegged 'stablecoins' have emerged as a new payment method that, while using new technologies, has the potential to improve payment efficiency, speed up settlement processes, and reduce end-user costs." However, it is also mentioned: "Despite the value of stablecoins may be pegged to the U.S. dollar, but may not have the same protections as traditional payment methods such as physical currency or deposits in bank accounts. Therefore, as the use of stablecoins increases, we must also pay attention to proper regulatory and supervisory frameworks, This includes focusing on payments innovators in the private sector, which are currently outside the traditional regulatory arrangements that apply to banks, investment firms and other financial intermediaries.”
