The overall crypto market is facing an unprecedented meltdown over the past few months, resulting in high sell-offs from investors owing to the highly volatile prices of cryptocurrencies. As a result, regulatory bodies from leading countries are now looking at imposing strict rules on crypto coins and exchanges in order to reduce their implication on the overall financial state of nations. On Tuesday, the US Treasury said that it was seeking input on the opportunities and the risks that are posed by digital assets in the country. It is now preparing a report for President Joe Biden on the implications of cryptos, as per a report by Reuters. On the other hand, global regulators have called for stablecoins to comply with the same safeguards as traditional forms of payments.
Back in March, Biden signed an executive order directing government agencies to study cryptocurrencies and other related products, including central bank digital currencies (CBDCs). Nellie Liang, Under Secretary of the Treasury for Domestic Finance, said in a statement, “For consumers, digital assets may present potential benefits, such as faster payments, as well as potential risks, including risks related to frauds and scams.”
The US Treasury will be looking at inputs on various aspects, including how businesses are using crypto, how the country’s poorest could benefit or face risks, and whether customers are protected sufficiently. The agency will accept comments until August 8.
On the other hand, IOSCO, a global body for securities regulators as well as a committee at the Bank for International Settlements (BIS), said on Wednesday that it had formally adopted proposals on stablecoins put out to public consultation last year in October, Reuters reports.
Regulators said that stablecoins must face the same safeguards as traditional forms of payments. The guidance shows when existing rules of the payment sector should apply to large stablecoins. They added that this marked a major step towards applying “same risk, same regulation.”
IOSCO chair Ashley Alder said, “We expect the same level of robustness and strength in these aspects in systemically important stablecoin arrangements.”
Jon Cunliffe, deputy governor of the Bank of England and chair of the BIS committee, said, "Recent developments in the crypto-asset market have again brought urgency for authorities to address the potential risks posed by crypto assets, including stablecoins more broadly."
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For those unaware, stablecoins are cryptocurrencies that are pegged to fiat money or exchange-traded commodities, making them comparatively more stable than regular cryptocurrencies. However, it was the ‘de-pegging’ of the TerraUSD stablecoin that caused the crypto market meltdown back in May.
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