Crypto

U.S. Senate Banking Committee Throws Softball Questions To Stablecoins Issuers

Stablecoins remain in warm water in The States… or are they? The U.S. Senate Banking Committee corresponded to Circle, Tether Holdings Ltd., “Coinbase, Gemini, Paxos, TrustToken, Binance.US, and Centre.” What do these business share? They all concern stablecoins pegged to the United States Dollar. Is the United States federal government doing a severe inquire this time? Probably not, evaluating by the concerns they ask. But they may be…

Related Reading | Crypto Stablecoins Double United States Junk Bond Yields

On the very first day of November, the Chair of the Senate Banking, Housing, and Urban Affairs Committee, Sen. Sherrod Brown released a declaration. It’s in reaction to the Presidential Working Group on Financial Markets’ report on stablecoins.

“Today’s Presidential Working Group report highlights the risks that the rapid growth of stablecoins present to families and the economy. We must work to ensure that any new financial technologies are subject to all of the laws and regulations that protect investors, consumers, and markets, and that they compete on a level playing field with traditional financial institutions.”

Less than a month later on, Sen. Brown assaulted. He “sent letters to stablecoin issuers and exchanges seeking information on how companies are protecting consumers and investors.”

The Tether FUD

Let’s not kid ourselves, the United States Government has actually had its eye on Tether for a long period of time. Even though the business now routinely produces a progress report by an accounting company, the heat is still on the most popular stablecoin. A couple of months earlier, there was a report that a few of Tether’s executives might deal with a criminal probe for declared bank scams. Last month, they paid a $41M fine to the U.S. Commodity Futures Trading Commission. 

However, this time the focus appears to be on all stablecoin companies. Is there a factor for this? Does it pertain to CBDCs? Let’s go to the files.

What Does Sen. Brown Want To Know About Stablecoins?

Even though the U.S. Senate Banking Committee’s actions appear company, they’re simply evaluating the premises. All of the stablecoin companies have actually responded to on many celebrations the 6 concerns the SBC asks on the letter they sent out. And they don’t ask the million-dollar concern, where are the funds that back all the coins you’re releasing? That’s the heart of the matter, is it not?

The U.S. Senate Banking Committee asks the stablecoin companies to “describe the basic purchase, exchange, or minting process,” and to “detail the process to redeem USDC and receive U.S. dollars.” They ask “how many USDC tokens have been issued, and how many have been redeemed?” Then, they turn on the heat, “Briefly characterize the market or operational conditions that would prevent the purchase, or redemption, of USDC for U.S. dollars, or another digital asset.” And request info on “any trading platforms that have enhanced capabilities, privileges, or special arrangements.” Finally, they inquire about research studies “about how specific levels of redemptions would affect” the stablecoin in concern.

That’s their primary concern. In the letter, Sen. Brown admits:

“I have significant concerns with the non-standardized terms applicable to redemption of particular stablecoins, how those terms differ from traditional assets, and how those terms may not be consistent across digital asset trading platforms.”

None of those look like difficult concerns for the stablecoin companies. They should have already-written responses for the majority of those. And the “significant concerns” that Sen. Brown has are completely regular, daily chatter. Are these softball concerns part of a larger strategy, though? Is the United States federal government simply evaluating the field?

BTC/ Tether rate chart for 24/11/2021 on Binance | Source: BTC/USDT on TradingView.com

Stablecoins Are In Direct Competition With CBDCs

Bitcoin and Altcoins are not even associated to CBDCs. Even though they’re all digital, they exist in totally various fields and have unique objectives. Stablecoins, nevertheless, serve a comparable function to CDBCs. And, typically, federal governments don’t like competitors. Is this the factor the United States federal government expanded its queries from Tether to all stablecoin companies? We’ll understand for sure in a couple of months. 

Related Reading | How Will The Crypto Market React To Next Week’s Senate Hearing On a Digital Dollar?

All federal governments appear to be minimizing their CBDC strategies, however they don’t deceive us. 

CBDCs are coming faster than later on.

Featured Image: MotionStudios on Pixabay | Charts by TradingView

Michael Evans

Professional writer, editor, and producer with over a decade of experience. I'm an experienced editor who has written for a variety of publications, and I specialize in editing non-fiction articles, news, and business blogs.

Related Articles

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Back to top button

Adblock Detected

Please turn off the Adblocker