Regulation of Tether will be an “apocalypse” for cryptocurrencies
U.S. regulators are putting increasing pressure on unregulated stable agents like Tether. Cryptocurrency community fears consequences.
The cryptocurrency community is alarmed by a new U.S. bill called the Stable Act. If passed, the multibillion-dollar transactions will cease and the development of the industry will be delayed for several years.
Under this law, issuers of stable coins, such as Tether, must have banking licenses. That’s not all. The bill imposes additional reporting requirements on the Federal Reserve (Fed). It also proposes a reconciliation of issuance in addition to current audit requirements, as well as an insurance policy to cover assets.
Another suggestion is that Stablecoin issuers may need to hold reserves directly with the Fed. As a result, they come under the control of the central bank, severely limiting their open use.
Tether is Cryptocurrency apocalypse
Dragonfly Research has carefully analyzed the current use of Stablecoin. In its report, it concluded that the passage of the bill could mean the end of Tether:
“There is no doubt that the day of Tether’s destruction will be apocalyptic.”
Tether is the largest and most widely used steblecoin today. According to the Tether Transparency Report, this year alone its supply has increased by 410%, and its market capitalization has risen from $4.1 billion in early January to $20.9 billion.
However, some agencies and the U.S. Attorney’s Office are investigating Tether. So far, the company has taken only minor steps in terms of protection or controls.
The study also says that Tether cannot sustain such huge growth, which is unsustainable. According to the authors, the entire industry collapses on the day it dies.
“Crypto markets will take over, stock markets will be chaotic, millions of crypto traders will likely lose access to assets, and prices will fall.”
The future of stable stocks
For now, the Stability Act is just a proposal. For example, it is drawing a lot of criticism from industry leaders and entrepreneurs. They argue that the bill would return the U.S. to a dark era of innovation and digitization.
However, a recent statement from a presidential task force does not bode well for this segment. The statement says that all stable money holders should scrutinize customers, which means that stable coins are in the firing line.
Perhaps Tether is not the digital dollar of the future. First, the regulated Stablecoin, which will become the de facto standard, is only one possible replacement. Second, they increase control and oversight by governments, banks, and tax authorities. If this is true, the digital money movement could make our freedom of today a thing of the past.