The U.S. Treasury made further hints at new laws for stablecoins as Nellie Liang, the Under Secretary of the Treasury for Domestic Finance, fueled more stablecoin regulation speculation with comments on investors’ potentially big risk’ when using stablecoins. Following on from the Financial Stability Oversight Council November 2021 report on stablecoins, the top official for financial oversight at the U.S. Treasury stated that “If Congress does not enact legislation, the regulators will try to use what authority they have.”
The Treasury has limited powers when it comes to regulating.
The U.S Treasury has limited powers as major stablecoin regulation is impossible without backing a congressionally mandated authority. “They can do a little here and a little there, but if these are foundational to crypto assets and aren’t stable, that could be a big risk,” Liang stated of regulators’ powers. The preferred choice of leverage users and scalpers, stablecoins, help traders get in and out of crypto assets.
USDT with over a $75 billion market cap is the largest stablecoin.
Tether, the largest stablecoin at over a $75 billion market cap, has been put under the microscope several times. In the most recent report in March this year, Moore Cayman, a Cayman Islands-based accounting network, affirmed that Tether Holdings Limited’s USDT stablecoin tokens are fully backed by its reserves. However, its widespread use continues to raise concerns among policymakers. Regulators claim that investor runs on stablecoin could wreak havoc on the market, while the sheer size of a market collapse could upset traditional financial markets if such a run took place. Earlier, the Financial Stability Oversight Council stated that it is prepared to take steps on its own to address stablecoins if Congress fails to pass legislation.