There has been a lot of concerns regarding stablecoins and their issuance. This is why US Senator Sherrod Brown recently asked crypto exchanges that how are they protecting investors? Some of the names include Coinbase, Gemini, and Binance. He also enquired the same from the largest stablecoin issuer, Tether. Sherrod also voiced his concerns particularly for the redemption of some specific stablecoins.
Stablecoins: The Big concern
The US Senator has recently sent letters to a number of crypto exchanges and stablecoin issuers. Apart from the names mentioned above it also included Centre and Paxos as recipients of the letters. It is good to see that the US Senator is asking the right question about protection. We all know that the crypto space isn’t regulated yet and it is important to know how exchanges are dealing with investor protection.
The letter sent by the US Senator states the difficulties that investors could face in understanding stablecoins and the risks that come with it. He also said that exchanges and companies are hiding the complicated terms in the fine print which investors either can’t find or understand. This lack of transparency is a big problem that needs to be fixed. Another questions being asked were the rights that the investors have when they purchase stablecoin from exchnages vs the actual issuer.
Why there is so much concern regarding stablecoins?
Crypto is volatile but stablecoins are made in such a way that they are stable. They help in trading and are often back by assets that help stabilize the prices. Some are back by other crypto atleast double the amount of their circulation to maintain prices. While, in case of Tether, the company claims that they have over $70B dollars backing the tokens in circulation. And this is the reason that the authroties are showing so much concern regarding it. No one knows where this fund is or how they have been managing it. Therefore, even the government is asking exchnages about investor protection in case something goes wrong.
What are your thoughts as the US Senator asks exchnages and stablecoin issuers how they are protecting investors? And do you think that the concern from the official is justified in case of stablecoins? Let us know in the comments below. Also, if you found our content informative do like and share it with your friends.