The U.S. Federal Reserve’s board of directors issued a report calling stablcoins “a potential risk to the financial stability of traditional markets.
In a monetary policy report, the Fed’s directors wrote that the “collapse in the value of certain steiblocoins” and “recent problems” in the cryptocurrency market show “structural weaknesses” in digital assets. Of course, we’re talking about the collapse of UST Stablecoin and the entire Terra ecosystem in early May.
“Stablecoins that are not backed by safe and sufficiently liquid assets, and that do not fall under appropriate regulatory standards, pose risks to investors and potentially to the financial system. These vulnerabilities can be exacerbated if there is a lack of transparency regarding the risk and liquidity of assets to back the token,” the report emphasizes.
Fed Chair Jerome Powell is scheduled to testify before the Senate Banking Committee on June 22. It is possible that the regulation of stabelcoins and cryptocurrencies in the United States will be discussed.