Tether faces rising regulatory scrutiny as the FSOC warns of systemic risks and is ready to act if Congress delays.

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The rise of stablecoin regulation is a hot topic right now, and it’s becoming clear that Tether is not prepared. Tether enthusiasts often claim it’s too big to fail, but the Financial Stability Oversight Council (FSOC) paints a different picture in its latest annual report. FSOC highlights the systemic risk Tether poses to the crypto market, pointing out its unregulated and opaque nature. What many don’t understand is that when something is labeled “too big to fail,” it attracts heavy regulation. FSOC is urging Congress to pass stablecoin legislation, and if Congress doesn’t act, FSOC is prepared to step in.

The situation for Tether looks dire. Once insignificant enough to escape regulatory scrutiny, Tether is now too large to ignore. The U.S., under Trump, is likely to pass new stablecoin laws, and it’s doubtful Tether will be able to comply. Tether thrived in what many see as a regulatory vacuum during the Biden administration, but it’s poised to struggle under the coming wave of crypto-friendly yet stringent regulation.

The impacts of these regulatory changes are significant. Many crypto enthusiasts worry about the future of their investments, and the market could see substantial shifts as companies scramble to comply with new laws. This increased scrutiny could lead to more transparent and secure practices, but it also means a period of adjustment and potential volatility.

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One of the most shocking details is the extent of the potential regulation. FSOC’s report indicates a readiness to take action if Congress doesn’t move quickly. This level of intervention is unprecedented in the crypto space and signals a shift towards a more regulated environment.

In historical context, this situation is reminiscent of other financial market regulations where rapid growth and lack of oversight led to systemic risks. The dot-com bubble and the 2008 financial crisis are prime examples of how unregulated markets can lead to broader economic issues. The current push for stablecoin regulation aims to prevent a similar outcome in the crypto market.







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Sources:

https://cointelegraph.com/news/is-tether-usdt-noncompliant-europe-mica

https://finance.yahoo.com/news/tether-phase-euro-backed-stablecoin-082723776.html

https://beincrypto.com/tether-discontinues-eurt-mica-regulations/

https://dailyhodl.com/2024/12/08/treasury-departments-fsoc-says-stablecoins-represent-potential-risk-to-us-financial-stability/

https://www.pionline.com/washington/ai-cybersecurity-digital-assets-among-risks-us-economy-financial-stability-oversight

https://www.msn.com/en-us/money/markets/fsoc-warns-stablecoins-remain-a-potential-risk-to-financial-stability/ar-AA1vqaZs

https://home.treasury.gov/news/press-releases/jy2738

https://home.treasury.gov/system/files/261/FSOC2024AnnualReport.pdf

https://cryptonews.com/news/coinbase-exec-predicts-stablecoin-regulations-by-2025-trump-win/

https://www.msn.com/en-us/money/markets/coinbase-policy-chief-expects-speedy-approval-of-crypto-laws-following-trumps-victory/ar-AA1v6co0

https://www.coinspeaker.com/coinbase-chief-policy-officer-sees-speedy-approval-crypto-legislation-trump-era/

https://www.congress.gov/bill/118th-congress/house-bill/4766

https://www.hagerty.senate.gov/press-releases/2024/10/10/hagerty-releases-discussion-draft-of-comprehensive-stablecoin-legislation/

https://www.congress.gov/bill/118th-congress/house-bill/4766/text

https://www.coinbase.com/learn/community

https://cryptoslate.com/coinbase-resolves-solana-transaction-delays-admits-internal-missteps/

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