The U.S. regulatory bodies have been raising the alarm for the rise of cryptocurrencies, especially stable coins that aim to replace national fiat currencies for a long time. But as crypto gets increasingly mainstream in the past few months, all the risks caused by introducing stablecoin like Tether (USDT) which is pegged with the U.S. dollar are very much real for U.S. government officials. Many states have already imposed crypto laws within the United States of America, individually. In December last year, U.S. regulators have presented a bill called the Stable Act that does not overlook stablecoins and intends to regulate it even further.
All about the Stable Act
The Stable Act remains a proposed regulation that is yet to be passed by Congress. It has several inclusions such as the following:
- According to this proposal, the entire ecosystem of stab lecoin needs to be altered at a primary level.
- This act threatens the growth of stab lecoin infrastructure and development which has been continuing at full-throttle and opening new avenues.
- Stable Act includes specific instructions and obligations for stablecoin issuers like Tether (a sister company of Bitfinex crypto exchange) that would be mandatory to follow.
- Among the many requirements to fulfill, a stablecoin issuer has to have a federal banking charter as proof of compliance with state-based regulations and associated laws.
- All of the existing banking laws and regulations would be unavoidable for issuers. According to many cryptocurrency enthusiasts, the Stable Act tends to make future stablecoins more centralized.
- Finally, all stablecoin issuers willing to develop and launch a new stablecoin based on a fiat need to be insured by the Federal Deposit Insurance Corporation. This means that the stablecoin compliant to this bill has to be reserved directly at the Federal Reserve.
Why is the Stable Act required?
Many have started propaganda against the Stable Act calling it needless but they have not thought things through because the U.S. government has introduced the bill as a measure to save crypto owners and traders from suspicious stablecoin issuers.
The U.S. Securities and Exchange Commission (SEC) considers Tether (USDT) and its owner company as one such shady enterprise that involves billions of dollars worth of unverified USDT issuance. The company got caught up in a huge controversy in 2018 when it was discovered that each one of USDT that this company mint is not actually pegged with one U.S. dollar as advertised since the inception of the project.
Things to consider if you own stablecoins
Following steps should be taken by those who still own stablecoins
- Firstly, there is no need for panic because the Stable Act is still under review.
- Research a bit into the company that issues the stablecoins you own.
- Experts believe that stablecoin is not a good investment (because its price remains unchanged) but a better alternative to use for transactions.
The cryptocurrency scene is as rewarding as it is challenging for those who have no idea which of the over 2000 crypto projects including several stablecoins are worth investing.
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