Now all the stable coin issuer companies will go through under a new regulatory framework, which will ensure the transparency of Stablecoins.
Two US Senators Trey Hollingsworth in the House and Sen. Bill Hagerty introduced legislation to force all the companies, which are operating their stable coin business, to reserve funds in short-term govt securities investment for at least 12 months and also to reserve real US dollar funds. With this proposed legislation it is aimed that huge transparency will come on the operations of stablecoins by companies.
Introduced legislation “The Stablecoin Transparency Act” will also have provisions to restrict the Companies to show audited reports demonstrating their reserves regularly.
Senator Hagerty indirectly noted that people, which are using stable coins, want to ensure the safety of their funds, so this bill works perfectly for the same.
“From whether coins are securities or commodities, to who is in charge of regulating them, those in the cryptocurrency marketplace are navigating significant ambiguity.”
Benefits for users but not for companies
At present, more than dozen of stable coins are under operation in the crypto industry which includes USDT, USDC, BUSD, UST, USDP as dominating stable coins. Now under the new Proposed legislation, these companies will provide full details about the backed funds but few companies will now see this legislation as a negative step for themself.
In particular, we can take the example of USDT issuer company Tether, a subsidiary of Bitfinex. Tether always claimed that funds behind the USDT coin were reserved. But many times many reports claimed that Tether failed to maintain the reserved funds.
But the latest initiative by the US lawmakers will surely result in some better positive confidence among the crypto investors to hold their funds in stablecoins and control the operations of such companies which are under the suspect of unfair activities.