Since December 2, 2020, when the STABLE Act was presented, and which was intended to regulate the issuance and control of stable tokens issued by private entities, in order to regulate this adaptation of credit and dispel the danger that this would cause to the already shaky position of commercial banks currently operating in the markets. While this document even expounded a certain protectionism for those with few financial resources, it only focused on amplifying the already agonizing agony that would, in the not so distant future, undermine the foundations of an institutional formation that would reinforce an idiosyncratic and solidly thought of hard currency as operating in the fiat system.
Now, 2021, with a whole series of events swirling around cryptocurrencies, the so-called stable currencies are now a link that could materialize as a regulated entity in order to curb what they call this "financial stability challenge". While the measure seeks to put under observation the sudden growth of the representation of a peer-to-peer system that seeks to extend a credit that will massify the potential use of cryptocurrencies, something that the current banking system cannot control and a legal recourse could give it time to either adapt or simply succumb to the digital cryptocurrencies of the central banks. The life of several institutions is at stake in the next few years.
At that time, tokens did not represent a tangible threat, but on the contrary, stable currencies lacked this confidence as they were considered as destabilizing legal tender as an alternative exchange system and, with the appropriate support, could drag many sectors to prefer them to fiat issues or even to the digitization of these in the systems close to implementation. The idea now, which outlined a way to control these private digital parities, is now extended under the name of reinforcing protectionism against cryptocurrencies.
We must remember that the approach that we want to draw is a total control through the digital currencies of the central banks who are simply the entities controlled by an endless bureaucratic management. Now, what if we start drawing these digital currencies with real hard assets, gold for example, silver or some other commodity, even Bitcoin (BTC) or Ether (ETH). The combinations and probabilities of reinforcing stable currencies increases the possibility of having a massive exodus to these financial instruments. The first facet of today's money is lost, trust is growing more and more in hard and alternative assets, and decentralized digital resources are part of this thinking.
Part of the beginning of The STABLE Act project will clearly have modifications, its mere comprehension and presentation before the House of Congress simply demonstrates a lack of vision and a poor knowledge of the subject. It is not even strange to indicate that it actually harms those minorities who see cryptocurrencies as that protection factor that for decades has been denied to them in the traditional financial system.
"Stablecoins are growing rapidly in terms of market capital, and now account for approximately 20% of the total size of prime money market mutual funds." A rather curious and dangerous statistic, not least of which is that the Federal Reserve (FED) will be moving quickly to issue its control over this issue. Again, we will see parameters set that will be empty, trust is an element that really counts and does not last in the hands of those who only turned the current system into a game, a meaningless paper drawing that will have no return in its management.
As always I leave at the end of this article the links to some articles that deepen this topic and touch on more relevant information and more direct access to the source consulted. You can observe and better generate an opinion about this topic to have a solid base about cryptocurrencies and their attempts of regularization.