Stablecoin's influence expands, European Union's Central Bank to regulate more tightly
The European Central Bank (ECB) calls on the European Union to implement stablecoin regulations between countries. This is because stablecoins are increasingly influencing the digital asset market.
Although the crypto market is seen as separate from the global economy by the ECB, there are potential systemic risks as the market share of stable tokens grows.
The ECB highlights the need for international standards for stable tokens, particularly consistency between countries. Because, this is considered to be able to cross between countries in seconds.
The central bank reminded regulators not to assume the economy will be safe from the effects of stablecoins. If this token becomes more popular, then all industries can be affected.
The central bank reminded regulators not to assume the economy will be safe from the effects of stablecoins. If this token becomes more popular, then all industries can be affected.
Millions of crypto users use stable tokens to maintain purchasing power, make transfers between exchanges, value derivative instruments and buy other digital assets.
The main problem with the popularity of stable tokens is the lack of guaranteed funds. Each publisher will use the guarantee of legal agreements, documents and explanations on the site.
Other stablecoins have failed miserably, including Terra UST (UST), Base (BAC) and dozens more. Large stable tokens are not without a peg failure, including USDT which once traded for under US$1.
In addition, the ECB said the weak regulatory framework led to a lack of clarity for payment processors. The difference in transaction speed between blockchains is another issue, with some stablecoins moving away from Ethereum which is seen as slow and expensive.
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