Cryptocurrency markets have come under renewed pressure after top U.S. officials, including Treasury Secretary Janet Yellen, said they expect to issue recommendations on stablecoins, important assets in the digital economy , in the coming months.
Bitcoin has jumped about $ 2,000 in the last two days to about $ 29,500, leaving the most actively traded currency flirting with lows reached the end of last month. Other major currencies such as Ether and Binance are also coming under selling pressure.
The crypto picture comes when global financial watchdogs were attacked in the sector after years of almost unrestricted growth.
Yellen “stressed the need to act quickly to ensure that there is an appropriate U.S. regulatory framework in place” in a president’s working group on financial markets that she convened Monday to discuss tokens, according to details published by the meeting.
Participants discussed the rapid growth of stablecoins and their potential use as a means of payment, as well as the potential risks to consumers, the financial system and national security, the Treasury said.
Participants in the meeting were the heads of the Federal Reserve, the Securities and Exchange Commission, the Commodity Futures Trading Commission and the Treasury, as well as the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation.
Buying cryptocurrencies like bitcoin or dogecoin directly with standard currencies like dollars or pounds can be a cumbersome process. Stablecoins are meant to make it easier. They are privately issued digital tokens linked to other assets, and many claim to be backed up one-on-one with dollars.
Tether is the largest, and half of all bitcoin transactions are processed using, according to CryptoCompare. Its nearest competitor, USD Coin, has grown more than 3,400 percent since January, according to operator payment technology company Circle, which announced listing plans on the New York Stock Exchange this month.
But the meeting of top U.S. watchdogs this week reflects growing concern among governments and central banks about the potential risks ranging from the potential use of stablecoins in money laundering to their impact on monetary policy. .
The vast reserves that stablecoin operators have to maintain to honor their one-on-one support commitment also pose potential risks. Tether’s reported short-term debt properties known as business cards make it one of the largest holders in the world. The rating agency Fitch has warned that any rapid liquidation of such important reserves could destabilize short-term debt markets.
Last month, Eric Rosengren, president of the Boston Fed, called tether a possible challenge to financial stability. Earlier in July, Fed Chairman Jay Powell told the Senate banking committee that stablecoins were “growing incredibly fast” but lacked sufficient regulation.
Late last year, a group of members of the U.S. Congress proposed legislation requiring stablecoin issuers to obtain a bank card, follow banking regulations, and receive approval from the Reserve. Federal and from the FDIC.
Bank of England Governor Andrew Bailey said in June that stablecoins would face “difficult and relevant questions”. The BoE has warned that operators should not enjoy “regulatory arbitrage” through looser rules than traditional banks.
International organizations have demanded even more action on this corner of the cryptocurrency market. Last month, the Basel Committee on Banking Supervision, the most powerful banker of banking standards in the world, said stablecoins would qualify for existing rules if they were fully reserved at all times.
A letter published this month by Yale professor Gary Gorton and Fed attorney Jeffery Zhang have studied similarities with historical examples of private money, which were often subjected to scrutiny.
“If policymakers wait a decade, stablecoin issuers will become the funds of the 21st century money market – too big to fail – and the government will have to intervene with a bailout package every time there is a financial panic, ”they wrote.