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Bank of America: regulation of stablecoins is a catalyst for mass adoption


The United States Department of the Treasury‘s report on the risks of stablecoins is an “indication of urgency” of regulating stablecoins, given their potential to become a viable payment method. Bank of America (BofA) shared this opinion, writes CoinDesk.

Thus, according to the research note, institutions are waiting for regulatory clarity before opening access to digital assets. “Regulatory framework should incentivize payments companies to integrate blockchain technology and stablecoins into their platforms,” the analysts stressed.

In their opinion, Mastercard, Signature, Visa and Western Union can increase capitalization due to the regulation of stablecoins. BofA considers stablecoins to be “a systemically important asset with a market value of about $141 billion with a quarterly transaction volume of over $1 trillion in 2021.”

The banks themselves will start issuing their own stablecoins

The Treasury Department, on the contrary, saw a systemic risk in the rapid growth of stablecoins. Moreover, the authors of the document demanded that coin issuers be equated with depository institutions with mandatory deposit insurance.

This, as noted in BofA, may lead to the fact that the banks themselves will start issuing their own stablecoins.

Earlier, US senators disagreed about the report of the US Treasury. In particular, Cynthia Lummis called the requirement to equate issuers of assets with banks erroneous. However, the initiative found support from the main USDC operator of the American company Circle.

Lack of transparency of stablecoins may threaten financial stability

Recall that Finance Minister Janet Yellen announced the convening of a President’s Financial Markets Working Group (PWG) to discuss the regulation of stablecoins in July. At the same time, at the Federal Open Market Committee meeting, they said that the lack of transparency of stablecoins could threaten financial stability.

Previously in September, the US Securities and Exchange Commission (SEC) chairman Gary Gensler pointed out the risk of widespread use of stablecoins and called them “poker chips” in crypto casinos.

The official noted that in many cases there is nothing behind digital assets. Furthermore, that it is only a highly speculative asset class. He drew parallels with the “Free Banking Era” from 1837 to 1864 and questioned the “survivability” of most cryptocurrencies.

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