The talks on regulating digital assets will not end anytime soon with constant agitation for a transparent regulatory framework for all digital assets. Two weeks ago, countries came together to support a needed regulation on cryptocurrency due to the rise in its use for criminal and illegal purposes.
It seems the table has turned to stablecoins based on the working group on the financial market’s request to regulate the digital asset like other parts of the financial system. The stablecoins, which are pegged to a real currency, usually the dollar, have become popular following the increased demand for cryptocurrencies.
Why stablecoins must be regulated, according to the working group
The financial regulatory group recently reported their opinions on digital tokens. They opined that stablecoins have to follow the same regulatory standards as other currencies, primarily due to their increasing popularity. Unlike most digital assets, stablecoins are pegged to a real currency, which helps the investment stabilize prices.
The tokens are also popularly used to purchase other cryptocurrencies because of their stability. The group has some crucial members of the US financial system. Some of their members are Chair of SEC, Commodities Futures Trading Commission chairman, Heath Tarbert, and Steven Mnuchin.
Based on the group’s argument, the coin has to pass through some significant hurdles to check its use for money-laundering and other illegal purposes. The group recognizes the coin’s usage for mainly retail and smaller purposes. It has some worries because of America’s massive popularity and the continuous demand for crypto that it could be used for money-laundering.
The team encouraged vital players in the stablecoins market to align its usage with some laid down principles to prevent it from wrong usage. The recent partnership between the team members and international groups were mentioned in the reportage.
How the working group described stablecoins
The prominent group described the token as a security, commodity, or a derivative subject, primarily dependant on its designs and other factors linked to the Federal Securities. The advisory group explained that the link between the dollar and stable coin ensures its stability.
It is safe also to note that Steven Mnuchin, the man who spearheaded the G7’s meeting on creating regulatory laws for cryptocurrencies, is part of the group. After the virtual conference, several other internal decisions on regulating crypto sprung up, threatening the anonymity the platform’s users previously enjoyed.
Brian Brooks explained that the group reached a productive balance, recognizing the importance of stablecoins in the economy and the State’s duty to ensure the token was not used for illicit or security-threaten reasons. Recently, the FinCEN also proposed some regulatory framework for anonymous wallets. The regulatory authority requested adequate scrutiny of wallets by platform creators.
The US agency also set up some know-your-customer requirements wallet owners in the US have to follow. The proposed bill is in its planning phase, but sources suggest that it would become law. The body described some other limitations wallets would face, such as an additional approval from FinCEN for the transaction, which is $10,000. With these new legislations, secrecy in the platform will be a thing of the past.