The US CBDC bill will require stablecoins to be backed by dollars or by government securities and the issuers will have to publish audited reports as we can see more today in our latest cryptocurrency news.
The Stablecoin Transparency Act was introduced by Senator Bill Hagerty and Rep. Trey Hollingsworth and according to the bill, will require stablecoins to be fully backed by dollars or short-term government securities. The two legislators introduced the new bill designed to make sure that’s not an issue again. The stablecoin transparency act will require stablecoins to be backed by US dollars and government securities with maturities less than 12 months and it will also legally compel issuers of stablecoins like Tether and USDC and regularly publish audited reports that demonstrate the reserves. Senator Hagerty outlined:
“From whether coins are securities or commodities, to who is in charge of regulating them, those in the cryptocurrency marketplace are navigating significant ambiguity.”
The stablecoins are crypto-assets pegged 1:1 with fiat currency like the US dollar and the idea is that for every stablecoin in circulation, there’s a $1 bill in the bank. However, the New York Attorney General’s Office took Tether to task for spreading the perception and claimed that Tether’s claims that it is a virtual currency was fully backed by USD at that time were a lie. However, Tether issued reports showing a sizeable chunk of reserve in cash or cash equivalents like money market funds and substantial holdings in secured loans, crypto investments, and bonds.
Some of the investmetns helped Tether make a profit and they could make the company less liquid in case of a digital bank run but a decline in the price of BTC or other crypto holdings can reduce the value of the company’s reserve below the circulating value of USDT and boost the price potentially. Circle which partnered with Coinbase on USDC is the second biggest stablecoin in terms of market cap. By August, it announced that it will use cash only and short-term government bonds but in October, reports from Grant Thornton showed that this is the case and Circle announced it will hold $50 billion in reserves in BNY Mellon.
Both the chambers of Congress are controlled by Democrats and the duo will likely need more support from across the aisle to get the committee vote.
DC Forecasts is a leader in many crypto news categories, striving for the highest journalistic standards and abiding by a strict set of editorial policies. If you are interested to offer your expertise or contribute to our news website, feel free to contact us at [email protected]