“Regulators really start to care more when risks get greater for society,” said Jeremy Allaire, the C.E.O. Officials fear a digital-era bank run may loom if new rules aren’t created soon for the booming stablecoin sector. Tether, the company behind the most popular stablecoin, settled an investigation by the New York attorney general this year that alleged that it had obscured what it held in reserve. The urgency among regulators to rein in the industry has, in turn, generated a flurry of crypto industry lobbying all over Washington, Eric Lipton, Jeanna Smialek and DealBook’s Ephrat Livni report.įrom boom to bank run? In their short history, lightly regulated stablecoin issuers have shown that they don’t always have the cash reserves they claim. Stablecoins have become an important bridge between digital currencies and the traditional financial system.īut despite their name, stablecoins may be shaky. These digital currencies pegged to a stable asset like the dollar are used in crypto trading, banking and decentralized finance, addressing the problem of price volatility that plagues Bitcoin and others. Financial regulators are racing to regulate stablecoins.
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