FDIC

Chief Says Stablecoins

In addition to these two ECB officials, many others in the central bank are skeptical about crypto Digital assets have repeatedly been called out as a source of "funny business" and money laundering by ECB President Christine Lagarde

In reference to Lehman Brothers, which failed before the 2008-09 financial crisis, U S Treasury Secretary Janet Yellen said that FTX's collapse was a "Lehman moment" for crypto.

Considering the profound impact stablecoins could have on the established banking system, U S regulators must ensure the digital tokens fit in without disrupting it, according to Martin Gruenberg (chairman of the FDIC). Gruenberg's agency will significantly impact how stablecoins are regulated in the United States Recent sanctions against firms that misrepresent how FDIC deposit insurance backstops the FDIC has also imposed their operations

Gruenberg said that U S banks have increasingly offered crypto services, including custody of customers' digital assets, which is why his agency has remained cautious about accepting regulated lenders to participate

The post by Bindseil and Schaaf on Wednesday covers mainstream criticism of digital assets, including the claim that "Bitcoin is seldom used for legal transactions" and that crypto mining consumes a great deal of energy� Also, those who promote crypto do so at their own risk, stating that crypto constitutes a speculation bubble that will harm investors

Gasping for Air

The price of cryptocurrencies plummeted in 2022 The bitcoin price has fallen by more than 75% from its alltime high, near $69,000 in November 2021 The market capitalization of digital assets has dropped to $850 billion from nearly $3 trillion

Banks face reputational risks when they promote Bitcoin New money is needed to create speculative bubbles Moreover, Bindseil and cryptocurrencies, stablecoins are necessary to create a digital currency issued by a central bank in the U S "A stablecoin for payments could fundamentally alter the banking landscape," Gruenberg said A new form of shadow banking could be created with payment stablecoins, "possibly resulting in forms of credit disintermediation that may harm the viability of many U S banks "

Stability Oversight Council, Gruenberg is involved in cross-agency crypto oversight efforts� However, he has been openly skeptical of the usefulness of crypto�

Schaaf wrote that Bitcoin has repeatedly benefited from waves of new investors� Contrary to popular opinion, while many crypto critics call for strict regulation of digital assets, the collapse of FTX will likely trigger newfound scrutiny from regulatorsBindseil and Schaaf argue exactly the opposite

According to him, the industry has primarily focused on trading, and so far, we have not seen many benefits� "It remains to be seen if there is any potential there "

To deal with stablecoins, he said Congress should pass new legislation

"Regulation can be misunderstood as approval," the ECB officials wrote. "Misconceptions partly shape the current regulation were offered through bank subsidiaries, fully backed by short-term treasury bonds, and placed on regulated "permissioned ledger systems "

Of Cryptocurrencies

There are almost as many arguments against crypto as there are against innovations A severe price decline might look like a bursting bubble to many traditional investors and regulators, but in the crypto world, traders are already gearing up to buy the dip." The belief persists that space must be provided for innovation at all costs Bindseil and Schaaf probably believe that such gambles won't pay off —Crypto Weekly

"Knowing all parties involved in payment stablecoin activitiesincluding nodes and validators - is crucial to ensuring compliance with anti-money laundering regulations, preventing terrorism financing, and deterring sanction evasion " —Crypto Weekly