“It is not without irony that the biggest critics of a ‘central banking establishment’ who blame the US Fed for untying the US dollar from gold or from central banks in general for their monetary monopolies n don’t have the same concerns with Tether.”
The UK government aims to turn the jurisdiction into a global hub for crypto-asset technology, according to UK Treasury Secretary Rishi Sunak, who pointed to regulations opening up the use of stablecoins in the UK as a recognized form of payment. .
At the same time, the Financial Conduct Authority has announced that it wants to increase its enforcement options against problem companies as the regulator focuses more than ever on protecting investors and consumers.
What will have been seen as positive news by the majority of people, may have been a backlash for proponents of ultra-lax crypto regulation, said Alpay Soytürk, chief regulatory officer at Spectrum Markets.
“Stablecoins, which the Chancellor of the Exchequer intends to make legal tender, are the subject of some criticism. According to (upcoming) EU regulations, stablecoins are tokens referenced by assets or crypto-assets that are intended to serve as a medium of exchange and for which a stable value is assumed by referring to currencies fiat, commodities or other cryptographic values. And the most striking example of a stablecoin is “Tether” which promises a fixed 1:1 exchange rate for the US dollar and can be exchanged for other cryptocurrencies. Being exchangeable against, say, Bitcoin and pegging the value to the US dollar means that investors can jump in and out of Tether at any time to protect against fluctuations in volatile cryptocurrencies. This option has made Tether the most traded crypto asset in the world and by far the largest currency pair for trading Bitcoin,” Spectrum’s Soytürk continued.
“The problem with stablecoins is their reserves – unknown or insufficient or both. It is not without irony that the biggest detractors of a “central banking establishment” who blame the American Fed for having untied the American dollar from gold or from central banks in general for their monetary monopolies do not don’t have the same concerns with Tether. As most of us well remember the Lehman collapse of 2008 – and its ramifications – it is not the size of an asset class that is important for the potential impact on stability and the integrity of financial markets, but rather its interconnection. Given the growing number of private households engaging in crypto-assets, this should be taken into consideration.
“In summary, discussions of the potential of distributed ledger technology remind me a bit of Tesla. Publicly it seems there are only polarizing camps of believers or haters while a quiet majority simply make decisions based on reason and preference. This majority benefits from the protection of prudent regulation and in this context, I expressly welcome the recent declarations of the FCA.
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