Do Stablecoins Threaten Financial Stability?

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The crypto currency ecosystem is facing various challenges day after day, whether it is with lawsuits filed on stock exchanges or with strict regulations. Regulators are concerned that stablecoins may adversely affect the current financial system.

The Authorities Are Worried

Crypto currency his industry is full of negative reviews by various bank officials, many prominent deputies and SEC officials. The idea that this ecosystem threatens the dec constitutional system is also quite widespread among the authorities. But the most worrying issue for senior officials at the US financial website is the stablecoins that are circulating in the cryptocurrency ecosystem, the value of which is fixed in various fiat currencies such as US Dollars, Euros, Pounds Sterling, and has a market value of about $ 120 billion.

Officials say that wide-ranging regulations may be imposed on stablecoins by the Financial Stability Oversight Council. As a result of sudden sharp declines in the market, the fact that these stablecoins, the main value of which is fixed in fiat currencies, suddenly show an abnormal increase in market value as a result of loaded purchases made by investors to avoid losses, is one of the issues that worries the authorities.

Can Financial Stability Be Compromised?

Another common opinion among the authorities is that these stable cryptocurrencies, which are used for quite similar functions as the banking system, provide dec better returns to investors, which can compromise the stability of the current financial system. For example, most banks offer less than 1% interest to investors, while various crypto currency platforms offer stablecoins a return on interest of between 10% and 20%. The current situation makes stablecoins and crypto currency platforms a better choice for investors who prefer to evaluate their money by placing it at interest than traditional banking systems. The authorities are not sure whether the platforms that offer the possibility of such high interest rates are safe for investors.

SEC officials, cryptocurrency he often decries the future of comprehensive regulations on many issues, including stablecoins, covering his industry.

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