The United States Treasury made further hints at new laws for stablecoins on Dec. 17. 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 as broad strokes stablecoin regulation is not possible without the backing of a congressionally mandated authority. “They can do a little here and a little there, but if these are foundational to crypto-assets and they aren’t stable, that could potentially 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. Tether (USDT), the largest stablecoin at over a $75 billion market cap, has been put under the microscope several times.
Curiously, proponents of Bitcoin (BTC) and cryptocurrencies as a whole would argue that any regulation of the stablecoin space is a case of shutting the stable door after the horse has bolted. Dylan LeClair, a prominent Bitcoin analyst, claims that stablecoins are “preferred collateral for bulls,” which is “good to see.”
Furthermore, Alex Gladstein, Human Rights Foundation chief strategy officer tweeted that “Stablecoins are a bridge to a near future where Bitcoin users can-if they wish-peg holdings to any currency on mobile apps in a non-custodial non-KYC way outside the banking system, without needing altcoins, with instant global cheap payments.” In this sense, stablecoins are a stepping stone to broader Bitcoin adoption.