en
Back to the list

U.S. Senate Banking Committee Seeks Clarity on Stablecoins From Top Stablecoin Issuers

source-logo  coinfomania.com 24 November 2021 18:50, UTC

The U.S. Senate Banking Committee sent out a request to several stablecoin issuers and cryptocurrency exchanges, demanding an explanation on how the entire process works and how investors are protected.

In one of the letters sent out, specifically addressed to Tether Holdings Limited, the agency requested an immediate response by Dec. 3, 2021, on more information concerning Tether stablecoin, the largest stablecoin by market capitalization.

Led by the chairman of the committee, Sherrod Brown, the agency cited the increase in the usage of the stablecoins and the potential risks they pose to both investors and the market in general as stated in the President’s Working Group on Financial Markets (the PWG) latest report.

In the letter, Brown mentioned the market cap of Tether as of October 2021 that exceeded $127 billion, which is almost a  500 percent increase over the previous year, and added,

“The complex terms and conditions applicable to digital assets and stablecoins, as well as the need for reliable and resilient underlying networks, can make it difficult for investors and consumers to fully understand the details of how those assets function and their potential risks.”

He continued, “ I have significant concerns with the non-standardized terms applicable to the redemption of particular stablecoins, how those terms differ from traditional assets, and how those terms may not be consistent across digital asset trading platforms.”

The letter continued with the committee narrowing the information requirements into six different groups.

The six groups required detailed information on how consumers can successfully acquire stablecoins, how to redeem them, how many tokens were issued, factors that might affect the purchase or redemption of stablecoins, any trading platform closely knitted to the stablecoin, and any internal reviews or studies conducted.

According to Brown, the high market cap and the increased usage of the Tether stablecoin indicated there are some features that the company offers that are increasing its adoption by the public and attracting investors. 

One of the incentives might probably be related to the announcement Tether made recently to recruit Notabene’s Travel Rule technology, a compliance platform that manages regulatory and counterparty risk in crypto and blockchain transactions to ensure that their customers’ funds are safe and secure, free from money laundering via Virtual Asset Service Providers (VASPs).

coinfomania.com