Everyone in the cryptocurrency community would agree that stablecoins play a crucial role in both the crypto market and industry. However, officials from the United States Treasury Department have stated that there are various risks associated with stablecoins that must be studied in detail, particularly regarding what would happen if an overwhelming number of traders chose to withdraw various stablecoins simultaneously.
The U.S Treasury Department realizes that cryptocurrencies have become incredibly popular, and thus so too has the stablecoin market. As such, numerous discussions were had, which still continue to this day, about how to regulate the private stablecoins in the most effective way. To that end, a lot of meetings were conducted by the U.S Treasury in the past week for the purposes of studying the aforementioned risks regarding stablecoins and the financial systems, markets, and users who utilize the stablecoins on a regular basis. The benefits would also be examined.
Meetings about stablecoins
With the abovementioned information in mind, the U.S Treasury Department has set up meetings with several stakeholders from a variety of backgrounds, including market participants, Congress members, and consumer advocates. To that end, a meeting had, in fact, taken place this past Friday, wherein officials had inquired about stablecoins from the cryptocurrency community about whether direct oversight would be required should this kind of crypto asset management become widely adopted.
Furthermore, the meeting had also included talks about how risks could be mitigated by the regulators should a massive number of individuals choose to withdraw the stablecoins simultaneously, as well as if the traditional assets should be utilized to back the major stablecoins.
In related news, meetings with several credit unions and banks had also occurred for the purposes of discussing new ways of regulating stablecoins.
More attention is being given to the stablecoin market
The reason why the U.S Treasury has been focusing on the stablecoin market so much is because of the increased usage of stablecoins since the past year. In fact, as things stand right now, the overall market cap of major stablecoins such as USDC and USDT has surged to over $125 billion, with the previous amount being only about $37 billion this past January.
Moreover, a number of payment giants like Visa and MasterCard have both committed to providing stablecoin-oriented services and solutions, despite the fact that Senator Elizabeth Warren had recently declared that the crypto industry functions as a new type of ‘shadow bank.’ Janet Yellen, the United States Treasury Secretary, had also voiced her own concerns regarding stablecoins, wherein she talked about the sheer urgency of setting up a regulatory system and framework as soon as possible.