Stable coins: You need visible - and verified - means to support

StableCoins could punish their names in a crisis. The President of the President of Financial Markets wants to issue issuers of digital tokens such as Tether and USD Coin, which are monitored like banks, with strict minimum reserves and capital requirements.

Stablecoins can represent systemic risks. If frightened investors requested that a token be taken back at the same time that was not missing a solid property, his issuer could become insolvent. This collapse could trigger others. The view of the supervisory authorities is so selfish.

Gary Gensler, head of the Securities and Exchange Commission, compared stable coins with casino game chips. They are no longer rioting. They represent a $ 128 billion industry, which has grown by almost 500 percent in 12 months. Tether alone has a value of 71 billion

issuers of stable coins claim that they are bound to assets in the real world, including Fiat currencies such as the dollar. The promise of less volatility made it a popular instrument for retailers to buy and sell other digital assets such as Bitcoin.

As a rule,

issuers undertake to redeem stable coins for nominal value against Fiat money and to keep reserves in circulation in circulation. But reviews can be difficult.

The authorities of the State of New York and the Commodity Futures Trading Commission recently have Tether, the company that issues the largest stable coins with a fine because they claimed that their tokens were completely covered by dollars. Tether did not admit any misconduct or denied it.

In an update, she made it clear that only about 10 percent of the reserves were left in cash and bank deposits as of the end of June. The majority consisted of risky short -term commercial papers. It also said that it kept more than $ 15 billion in treasure changes.

The President's working group says that stable coin issuers should become insured persons such as banks. This would make reserves more transparent and protect investors. It could also pave the way for conventional lenders to issue stable coins.

This is hardly what wannabe-discourse intended. But without a reliable review of the financial strength, the promises of the stable coin emitters can prove to be dangerously empty.