The U.S. Securities and Exchange Commission (SEC) is poised to crack down on the burgeoning stablecoin market according to emerging reports.
On Oct 26, Bloomberg cited unnamed sources familiar with the matter in a report pertaining to new stringent regulations regarding stablecoins.
A highly anticipated report is expected to be issued this week by the U.S. Treasury and related agencies. It’s likely to grant the SEC and Commodity Futures Trading Commission (CFTC) authority over stablecoins and urge Congress to pass legislation that regulates stablecoins similar to bank deposits, according to the report.
SEC chair, Gary Gensler, has pushed for changes behind closed doors after repeatedly referring to stablecoins as “poker chips.” The recommendations may enhance the SEC’s ability to pursue enforcement actions and policies for stablecoins and crypto assets.
Stablecoin crackdown looms
Regulators could take an active role in reigning in stablecoins while lawmakers grapple with wider-reaching policies regarding the crypto industry.
In July, Federal Reserve chair Jerome Powell stated that stablecoins pose a threat and exist within an “underdeveloped regulatory framework.” In late September, Gary Gensler continued with the push for regulation stating that “people will be hurt” if crypto markets remain unregulated.
The truth is likely to be the opposite, however, as overreaching rules treating crypto the same as banks are likely to cause a market-wide crash, spell the end of innovation, and result in an exodus of companies from the United States.
Tether has come under the most scrutiny lately as it has yet to provide a full audit detailing its reserves. Last week, forensic financial research firm Hindenburg Research offered a $1 million bounty for any undisclosed details regarding USDT reserves.
Market outlook
The total combined stablecoin market is currently worth an estimated $134.8 billion according to CoinGecko. Of that total, around 52.4% is Tether’s USDT which comprises around 70.6 billion tokens. Around 36 billion, or just over half is on the TRON network with the majority of the remainder or 34 billion on the Ethereum network.
Tether competitor Circle has seen monumental growth this year with USDC supply increasing by 733% from just under 4 billion to 32.5 billion since Jan 1.
Binance’s BUSD is the third-largest stablecoin in circulation with just under 13 billion and a growth rate of almost 1,200% since the beginning of 2021.
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