Warning about the negativity that stablecoins will create in the markets, Fitch believes that regulators should take the necessary steps. The instability that may occur in the credit markets will have an extremely negative impact on the global economy. However, financial institutions want to enter the crypto-clearing business to reduce the sunday share of stablecoins such as USDT.
Stablecoin (USDT, USDC) Can Turn the Markets Upside Down
In its recent note, the rating agency said that digital currencies with a fixed value are backed by safe assets and therefore pose less risk to its investor. However, stablecoins that increase market share sundays pose another problem for the markets.
If we need to give an example via Tether, according to their statement in March, 26.2% of the reserves are in cash, deposits, reverse repo and government bonds. Fitch commented that half of the approximately $20.3 billion in Tether reserves are in commercial paper. This figure is larger than most markets in the United States, and there is a risk that only Tether retains such a large amount of power.
From the Fitch Note;
“If USDT suddenly goes to an asset sale and does so, especially at a time when there is sales pressure in the CP markets, it will negatively affect the stability of short-term credit markets”
Strict Regulations Are Required For Stablecoin
The possible effects of Stablecoins on short-term credit markets have been discussed for a long time in America. He even touched on this issue during his program at Michael Saylor last Friday and said that difficult days await the crypto currency markets. In a statement, Michael Saylor. He mentions that since stablecoins are competitors to CBDC, they may face strict measures.
Stablecoins are assets that many parties do not like. For example, central banks do not like it because it is a competitor to their own local digital currencies. Traditional marketeers, on the other hand, are worried that projects such as USDT create a market imbalance with the provisions they hold in their hands. The FED does not like them because they are competitors to the dollar.
This list may get longer, but we need to look at what stablecoins are waiting for in the near future. According to the Fitch note, strict regulations should quickly collapse like a curse on stablecoins. Thus, the problem will be limited at a certain point before it grows any further.
Of course, these strict stablecoin regulations will negatively affect the general cryptocurrency markets, Bitcoin and other altcoins.