News

Stablecoins on shaky ground? US council calls on Congress to enact crypto oversight

Published

5 months ago

December 7, 2024

The Financial Services Oversight Council (FSOC) is urging Congress to pass legislation that establishes a comprehensive federal framework for regulating stablecoin issuers.

A government organization — established by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 — published a report on Friday, Dec. 6, detailing what it perceives as a growing threat to the U.S. financial system.

Stablecoins, the FSOC says, “continue to represent a potential risk to financial stability because they are acutely vulnerable to runs absent appropriate risk management standards.”

The sector also remains largely concentrated, with a single firm accounting for “around 70 percent of the sector’s total market value,” council stated, referring to Tether (USDT).

Why Tether is problematic

As of 2024, Tether remains the dominant player in the stablecoin space.

While the FSOC report did not mention any company names, it cautioned that the lack of risk management standards with firms involved with stablecoins makes the sector “vulnerable to runs.” And Tether has faced scrutiny for not providing audits to verify that its coin is backed 1:1 by U.S. dollars or other assets.

Critics argue that if Tether does not hold sufficient reserves, it could collapse, causing a major disruption in the crypto market. ng up over 70% of the $204 billion market.

In a Sept. 14 social media post, Cyber Capital founder Justin Bons criticized Tether for its “lack of third-party audits,” calling the stablecoin an “existential threat to crypto.” See below.

3/17) There has never been an audit of USDT, despite promising to do so since 2015
This means we have to take their word for the vast majority of reserves, as they cannot be independently verified
The first firm to attempt an audit even got fired for being too thorough in 2018! pic.twitter.com/OYfj21HsKJ
— Justin Bons (@Justin_Bons) September 14, 2024

Previously, the firm settled charges alleged by the U.S. Commodity Futures Trading Commission in 2021 for making “untrue or misleading statements” about the reserves backing its stablecoin.

Stablecoins have also faced heightened scrutiny since the collapse of TerraUSD (UST). Once a prominent stablecoin, UST lost its dollar peg in May 2022, triggering a catastrophic death spiral that wiped out over $40 billion in value from the crypto market.

Despite these concerns, stablecoins remain widely used, especially for trading and liquidity.

Specifically, the FSOC warned that if the market dominance expands, its potential failure could “disrupt the crypto-asset market” and trigger “knock-on effects” for the broader financial system.

A few stablecoin issuers are under state-level supervision, but many “operate outside of, or in noncompliance with, a comprehensive federal prudential framework.”

Further, it added that these firms often provide “limited verifiable information” about their reserves and holdings, making it difficult to ensure “effective market discipline.”

Calls for legislative action

The FSOC recommended passing stablecoin regulations to alleviate risks. It urged Congress to develop “a comprehensive federal prudential framework for stablecoin issuers” and provide federal financial regulators with explicit rulemaking authority over the crypto-asset spot market.

“If comprehensive federal legislation is not enacted, Council members remain prepared to consider steps available to them to address risks related to stablecoins,” it added.

This is not the first time the FSOC has pushed for such measures; similar recommendations were made in its 2023 annual report.

Congress is currently reviewing the Clarity for Payment Stablecoins Act, a bill aimed at establishing clear regulations for stablecoin issuers. While the legislation has yet to pass the House, crypto proponents believe it could progress under the incoming Trump administration.

Meanwhile, concerns over stablecoins extend beyond the U.S. On Dec. 4, the Australian Securities and Investments Commission published a consultation paper outlining plans to enhance oversight of the stablecoin sector.

Similarly, Banco Central do Brazil (BCB) has raised concerns about the risks stablecoins pose and has proposed banning withdrawals to self-custody wallets as part of efforts to tighten regulatory oversight.

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Bitcoin

Here’s How Bitcoin Could Boost Demand for US Treasuries, According to Macro Guru Luke Gromen

Published

2 hours ago

April 28, 2025

admin

Veteran macro investor Luke Gromen says he likes Bitcoin (BTC) due to its potential to influence demand for US Treasuries.

In a new video update, the founder of the macroeconomic research firm Forest for the Trees (FFTT) says the Trump administration is in a position to boost demand for US bonds after the president signed an executive order creating a Strategic Bitcoin Reserve.

A Bitcoin bull market typically increases demand for dollar-pegged crypto assets, and according to Gromen, could ultimately drive demand for US Treasuries.

“Note that the Trump administration is still talking about putting T-bills (Treasury bills) into stablecoins, using stablecoins as a means to drive demand for T-bills. And obviously, they’ve talked about the Strategic Bitcoin Reserve.

Left unsaid in all of that is that the higher the Bitcoin price, the more stablecoin demand, the more T-bill demand there is…

I think the underlying theme of [the] US government desperately needs balance sheet and stablecoins and therefore Bitcoin can help the US government find balance sheet. I think that is absolutely still in play.

It’s one of the reasons why we still like Bitcoin over the intermediate longer term.”

Stablecoin issuers such as Tether and Circle predominantly rely on Treasury bills to back their coins on a 1:1 basis. As of December 2024, Tether has invested over $94.47 billion in T-bills to back USDT. Meanwhile, Circle owns $22.047 billion worth of T-bills as of February of this year to back USDC.

Additionally, two stablecoin bills that are progressing through Congress, the STABLE Act of 2025 and the GENIUS Act of 2025, require issuers to invest in T-bills and other real-world assets to back their coins.

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Disclaimer: Opinions expressed at The Daily Hodl are not investment advice. Investors should do their due diligence before making any high-risk investments in Bitcoin, cryptocurrency or digital assets. Please be advised that your transfers and trades are at your own risk, and any losses you may incur are your responsibility. The Daily Hodl does not recommend the buying or selling of any cryptocurrencies or digital assets, nor is The Daily Hodl an investment advisor. Please note that The Daily Hodl participates in affiliate marketing.

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Bitcoin

Monero’s XMR Rockets 40% as XRP Leads Crypto Majors Gains

Published

6 hours ago

April 28, 2025

admin

Shaurya is the Co-Leader of the CoinDesk tokens and data team in Asia with a focus on crypto derivatives, DeFi, market microstructure, and protocol analysis.

Shaurya holds over $1,000 in BTC, ETH, SOL, AVAX, SUSHI, CRV, NEAR, YFI, YFII, SHIB, DOGE, USDT, USDC, BNB, MANA, MLN, LINK, XMR, ALGO, VET, CAKE, AAVE, COMP, ROOK, TRX, SNX, RUNE, FTM, ZIL, KSM, ENJ, CKB, JOE, GHST, PERP, BTRFLY, OHM, BANANA, ROME, BURGER, SPIRIT, and ORCA.

He provides over $1,000 to liquidity pools on Compound, Curve, SushiSwap, PancakeSwap, BurgerSwap, Orca, AnySwap, SpiritSwap, Rook Protocol, Yearn Finance, Synthetix, Harvest, Redacted Cartel, OlympusDAO, Rome, Trader Joe, and SUN.

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Altcoins

Analyst Says Solana-Based Memecoin Going Much Higher, Sees PENGU Facing ‘True Test’ After April Surge

Published

10 hours ago

April 28, 2025

admin

A closely followed crypto strategist believes one memecoin running on Solana (SOL) is not yet done rallying, even after posting over 60% gains this month.

Pseudonymous analyst Altcoin Sherpa tells his 245,000 followers on the social media platform X that he’s bullish on Bonk (BONK) following the altcoin’s breakout of an accumulation zone on the three-day chart.

The trader shares a chart suggesting that BONK can rally to as high as $0.0000262 after taking out its resistance at $0.0000142.

“BONK is going much higher (I have a bag). Looks good on the charts as well.

Think I’m going to add to my position if I get a small dip.”

At time of writing, BONK is trading for $0.0000182.

Turning to the native asset of the non-fungible token (NFT) project Pudgy Penguins (PENGU), the trader says the altcoin needs to print a bullish higher low setup at around $0.0065 to start reversing its multi-month downtrend. Otherwise, Altcoin Sherpa warns that PENGU may drop to as low as $0.004.

“Coins like PENGU got rekt the last several months but are showing some signs of life. The true test is going to be where the next low is and how the reaction is.

The trend is still bearish, so don’t be so quick to catch knives. That said, we could see some reversal if the environment continues to ease up.”

Based on the trader’s chart, he appears to suggest that PENGU may soar to as high as $0.014 if the altcoin manages to establish a higher low.

At time of writing, PENGU is worth $0.00985.

As for the broader altcoin market, the analyst warns that most coins are still in a high-time-frame downtrend and that the gains witnessed this month could be erased. However, Altcoin Sherpa notes that it is now within the realm of possibility for altcoins to start carving a major cycle bottom en route to a bullish reversal.

“To be clear, I’m pretty bullish overall and think that we’re going higher and the next major dip is a BUY THE DIP situation.

HOWEVER, most alts still are in bearish market structures (see TAO) and continuation of that trend is down. I think we go higher for everything, but just a careful reminder that these sh*tcoins are still in bearish trends and have made lower highs, lower lows.

I do think that we’re doing better, though.”

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