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Stable-Coin Series: US Fed Reckons Financial Stability Through Stablecoins
The prime objective and prerequisite of cryptocurrency invention during last decade’s recession (in 2008-09) was to establish fidelity among investors’ class and to provide the anonymous method of mobilizing funds efficiently, ever since then it’s been signified as ‘digital gold’. With an objective of fostering the anonymity, a Japanese had to invent something which was not existed, this was possible when Blockchain technology, the digital ledger of constant Bitcoin transactions, was developed. But, owing to the rising scams in the crypto-industry in the recent past, the concept of Stable-coin has emerged and trend of such coins has been eye-catchy for now. In just six months’ time or so, the concept of stable coins has evolved.
For now, the U.S. Federal Reserve has come up with its fair assessment about stable-coins which happens to be constructive.
Yes, the US central bank has published this in its latest Financial Stability Report (FSR), where stablecoins are considered as a category include dollar-pegged cryptocurrencies like Tether, that are driven by conventional assets.
Price volatility is one of the key problems that has limited the use of early cryptocurrencies as a payment instrument. Extreme fluctuations in the value of bitcoin, for example, have made it a poor medium of exchange; the dollar value of bitcoin might double in a few hours. Stablecoins attempt to address this volatility by seeking to tie their value to an asset (for example, domestic currency) or a basket of assets (for example, a portfolio of sovereign currencies).
The next swing of stable coin craze has been observed at the beginning of 2019, but the stable coin today already differs from what it was last year.
Given the array of risks and unaddressed issues to date, the Federal Reserve and other regulators are cooperating closely to ensure that any stablecoin system with global scale and scope must address
a core set of legal and regulatory challenges before it can operate. As the Group of Seven has noted, “no global stablecoin project should begin operation until the legal, regulatory and oversight challenges and risks outlined (in this FSR report) are adequately addressed, through appropriate designs and by adhering to regulation that is clear and proportionate to the risks.