The European Central Bank (ECB) calls on the European Union to implement regulations stablecoins between countries. Because, stablecoins increasingly influential on the digital asset market.
Although the crypto market is seen as separate from the global economy by the ECB, there are potential systemic risks as the market share of stable tokens grows.
Stablecoins in the Eyes of the European Central Bank
The ECB highlights the need for international standards for stable tokens, particularly consistency between countries. Because, this is considered to be able to cross between countries in seconds.
The central bank reminded regulators not to assume the economy will be safe from the impact stablecoins. If this token becomes more popular, then all industries can be affected.
ECB highlights role stablecoin as a source of liquidity in the digital asset market. Currently, the majority of crypto traders use stable tokens such as Tether USD (USDT) and USD Coin (USDC) as a substitute for currencies. fiat.
Millions of crypto users use stable tokens to maintain purchasing power, make transfers between exchanges, value derivative instruments and buy other digital assets.
The main problem with the popularity of stable tokens is the lack of guaranteed funds. Each publisher will use the guarantee of legal agreements, documents and explanations on the site.
Tether modified the original agreement language claiming to keep one USD in a bank account for every one USDT issued. After the Attorney General of New York, USA, reviewed the claim, Tether now guarantees each USDT with various assets.
Stablecoins others have failed miserably, including Terra UST (UST), Basis (BAC) and dozens more. Large stable tokens are not free from stake failures, including USDT ever traded at a price below US$1.
Protos launch, ECB warns of failure of one of five stablecoins the biggest impact on the main financial sector.
The Financial Stability Agency (FSB) expressed similar sentiments on Monday (11/07/2022) and called for regulation for stable tokens as part of international regulations for digital assets.
In addition, the ECB said the weak regulatory framework was leading to uncertainty for payment processors. The difference in transaction speed between blockchains is another problem, where some stablecoins moved from Ethereum which was seen as slow and expensive.
The ECB supports the European Union’s proposal to regulate digital asset markets. This arrangement is considered an urgent matter for financial stability. The best advice is law enforcement stablecoin international. [ed]