Tim Massad, having served as the chairman of the CFTC (Commodity Futures Trading Commission) till 2017, stated that the US is very slow in its progress to develop a strategy for the update of the payment systems thereof. In a Joint Economic Committee’s hearing on Wednesday regarding the role played by the virtual assets for government, Massad stated that a CBDC (central bank digital currency) could be utilized by the United States for making advancement in its system of payments, which he categorized as the expensive and slow at present.
Additionally, the former chair of CFTC mentioned that stablecoins could also be utilized for this operation; however they also pose several most immediate challenges and hazards for the regulators of the U.S.
Massad identified that people utilizing Tether (USDT) as well as similar stablecoins to transfer funds among the exchanges was known as a great instance of the U.S. Payment system’s requirement to be revolutionized. Nevertheless, he further indicated that the reserves of the issuer were seemingly not invested in extremely secure liquid assets such as the dollar and, in this way, not insured as similar to the funds in conventional financial institutions. The former head of the CFTC recommended that the adoption of bank-like regulations along with a prohibition on the issuers from producing loans to eliminate the deposit insurance requirement.
Digital assets, stablecoins, and CBDCs are frequently referred to being the sources to attain higher market inclusion, so the authorities should focus on their potential to do so, as per Massad. They should immediately take action to enhance the financial services via other means additionally because the need is very big.
Peter Van Valkenburgh (the director of research at Coin Center) also attended the hearing and described altcoins to be an interesting zone across the crypto space nevertheless expressed apprehensions regarding the apparent scarcity of regulatory clarity for the issuers. Van Valkenburgh added that there are a few issuers of stablecoin who are involved in breaching the law.
The remarks from both Massad and Van Valkenburgh come after a report issued by the Working Group on Financial Markets (under the U.S. President) recommending that adequate regulation and observation should be maintained for stablecoins just like the banks. The group moreover pointed out that legislation is directly required to widely take account of the prudential hazards presented by stablecoin payment settlements.
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