Home > News > Finance > Focus on stablecoin regulation—what does it mean for Tether?
Currently, electronic money businesses and stablecoin issuers are regulated at the state level across the United States. However, US Treasury Under Secretary Nellie Liang recently expressed her view that this should change.
Liang argued that all non-bank payment providers, including money transfer companies, e-money companies, and stablecoin issuers, should be regulated at the federal level. She argues that state regulations date back to the days of physical cash, when money transmitters did not hold funds for long periods of time, and that times have changed and related regulations should change. did.
Mr. Liang highlighted how federal regulations can assist companies engaged in these activities in a variety of ways. Now, they must navigate a patchwork quilt of state regulations and apply for multiple licenses. She called it “cumbersome and inefficient” and outlined how federal standards would simplify things.
What do those regulations cover? The whole range from financial resources to risk management, oversight, and the activities these companies can undertake. For example, electronic money issuers will be limited to payment-related activities so as not to resemble banks.
How might this change affect Tether and digital currency exchanges?
Tether, the largest stablecoin issuer by market capitalization, has been banned from New York starting in 2021. Under current regulations, it can continue to operate on U.S. exchanges such as Binance, Coinbase (NASDAQ:COIN) and Kraken, and serve customers outside of New York. But nationwide regulations like the one proposed by Liang could change everything.
Tether is unlikely to get the green light from federal regulators, given its well-documented list of questionable practices, the aforementioned New York ban, and repeated refusals to prove reserves. The company’s hide-and-dagger approach likely runs counter to federal standards, given that Mr. Liang specifically mentioned that federal standards cover risk management.
With a market capitalization of approximately $120 billion and daily trading volume in the bull market in the tens of billions of dollars, the federal government’s ban on Tether would have a dramatic impact on the digital currency market and the prices of BTC, ETH, and other coins that have skyrocketed. will have a significant impact. Since the launch of USDT.
The Hong Kong-based company may see the writing on the wall and finally receive a proper audit, but several of its executives have been under investigation for years for alleged bank fraud. It is unclear whether reaching out now will help. Because of the tether.
What spells disaster for Tether could be a boon for legitimate companies
Regardless of what it means for Tether, regulatory uniformity is likely to have a positive impact on legitimate businesses that leverage blockchain technology and digital currencies to create utility.
In addition to efficiency gains and potential cost savings, federal regulation could make it easier to prove compliance, increase consumer protection, create industry confidence, and lead to more effective risk management. there is. This marks the debacle of FTX and UST that has plagued the digital currency market. It becomes a thing of the past.
Some people will always protest against any form of regulation, but the reality is that they already exist, and uniform rules for everyone to follow are probably the best bet for the industry and for honest players looking to innovate. That will be your ultimate benefit.
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