Despite the fact that the Bitcoin and Ethereum represent the most popular crypto investments, stablecoins represented a nearly $200 billion sub-sector before the fall of Terra.
Around the world, we see the beginnings of regulation for these stable virtual currencies.
This was the case in the United States even before the Terra crash. A President’s decree Joe Biden had ordered government agencies to investigate the dangers and benefits of cryptocurrencies. With the fall of Terra, they quickly discovered the dangers!
And wealthy investors like Mark Cuban have welcomed the focus on stablecoins, tweeting in September that “stablecoins will be regulated first. Standards are needed. »
Why are stablecoins targeted by regulators?
Due to the ease with which these cryptos can be traded, as well as their stable value, government authorities are concerned that they pose certain particular dangers to the financial system and the economy at large. Therefore, they must be controlled.
Many analysts believe that their regulation would benefit cryptocurrency marketsbecause it would end the period of wild west exchanges and would give investors more security.
Some rules for stablecoins have already been suggested in the United States. According to the government’s assessment, stablecoin issuers should be required to be insured as depository institutions and subject to regulation, among other points. Issuers of stablecoins would therefore be considered banks.
Read also Here is Tether (USDT) latest bet to make its stablecoin safer
Should stablecoins be regulated?
For investors in stablecoins, it has become difficult to be against their regulation after what happened with the TerraUSD (UST). The most cautious investors will opt for large stablecoins which will undoubtedly be completely regulated (USDT and USDC) in the near future.
While yield farmers looking for performance will opt for less capitalized, newer and riskier stablecoins.