As the market for stablecoins experienced accelerated growth, with an increasing number of issuers introducing new stablecoins and a subsequent increase in bankruptcies of these assets for a variety of reasons, it has become evident to policymakers and experts the importance of establishing specific regulation for stablecoins.
Recently, US Representative Maxine Waters (D-California) announced that the final version of the bill for stablecoins in USA has the potential to be ready soon. “We are on track to get a stablecoin project in the near term,” he told Bloomberg at the House Financial Services Committee, em 24 April.
Previously, the parliamentarian had already called a version of the PL “deeply problematic and bad for America”. In the report, Waters highlighted the importance of protecting investors with the new project: “It’s about ensuring that investors and people are protected.” The deputy added, stating: “We have to ensure that they have these assets to back the stablecoins.”
Recent movements in the American Congress regarding legislation on stablecoins have intensified in recent weeks.
What are Stablecoins?
AStablecoins represent a specific category of cryptocurrencies, developed with the purpose of serving as a means of exchange and currently used to simplify crypto operations. Offering an alternative to traditional cryptocurrencies, which are known for their high volatility, stablecoins have their value linked to assets such as commodities, fiat currencies or financial instruments, providing greater price stability. This is achieved by tying up the reserves of the base asset as security or through algorithms that manage the issuance of tokens.
Regarding the risks associated with stablecoins, ideally, issuers should maintain sufficient reserves of the base asset to guarantee price stability and, consequently, protect the value of investors' assets in the short term. Insufficient reserves, or being backed by a depreciating cryptocurrency, could result in the stablecoin being delinked, triggering a sell-off and loss of value.
