Connecting the massive wealth held in cryptocurrencies with the traditional financial system – stablecoins are meant to serve as a intermediator. The New York Times reports on how they are now the initial target for tighter regulation in the crypto finance space.
A NY Times article predicts that upcoming regulation will inevitably create winners and losers, as some industry players are better positioned to embracing it than others. Some may have to change their entire business models to come into line with the new rules. This has, in the previous weeks stirred up big waves of lobbying by cryptocurrency executives, lining up to meet with banking and financial regulators, looking to shape the new rules – realizing that federal oversight is now inevitable.
The purpose of stablecoin, with it’s pegged one-to-one stable asset connection (US dollar, gold or other) is to make it easier for people who hold cryptocurrency to earn interest or buy goods or services. But, under its current light-handed regulation – stablecoin is not at all stable. As the use of stablecoin is intensifying, so is the industry’s voices for stronger rules.
Only this year, the USD-tied stablecoins, such as Tether token, USD Coin and Pax dollar jumped in circulation from $30 billion in January to about $125 billion as of mid-September.