Stablecoins Face Up To Scrutiny from US Congress

The CEOs of six major cryptocurrency companies appeared at a hearing before the House Financial Services Committee in the US Congress this week. 

Crypto chiefs from FTX, Bitfury, Coinbase and others gave testimony to members of Congress during a session designed to clarify the benefits of crypto to the American economy.

Legislators are particularly interested in the future of stablecoins, and how regulation for these instruments might look.

Treasury Secretary Janet Yellen recently observed that stablecoins were well designed and had the “potential to support beneficial payments options,” while adding, “current oversight is inconsistent and fragmented.” 

A stablecoin is a type of crypto that bases its value on an external instrument like the US dollar or the price of gold. This makes them more predictable than traditionally volatile cryptos. However, even they are not immune to controversy, with management of the Tether stablecoin recently accepting up to $18.5 million in fines from the New York State Attorney General for concealing losses.

What does this mean for me?

As a crypto trader, any public scrutiny of the crypto ecosystem must be welcomed. Demystifying these assets will help crypto on its path toward becoming mainstream.

Stablecoins are an attractive option for new traders because of how easy they are to convert. One USD-backed stablecoin equates to one US dollar. Many exchanges do not charge trading fees between US dollars and stablecoin, yet they charge trading fees between US dollars and other cryptocurrencies like Bitcoin. It is an appealing way to get in on the game for crypto newbies.