The official said that using dollar stablecoins in the decentralized finance sector is a good thing because it can enhance the strength of the U.S. dollar.
A U.S. Federal Reserve official said that the increased use and adoption of U.S. dollar stablecoins could be good for the dollar's position as the world's dominant currency. Christopher Waller, a member of the Federal Reserve's Board of Governors, said the decentralized finance industry is good for the United States.
Stablecoins and DeFi are good for the dollar
Waller recently stated at an event in the Bahamas that DeFi adoption will support the dominance of the U.S. dollar due to the industry’s reliance on stablecoins. Waller stated that many people often “speculate that cryptocurrencies such as Bitcoin may replace the U.S. dollar as the world’s reserve currency.” However, he pointed out that most of the market capitalization in the DeFi space relies on the value of the U.S. dollar. He then added:
“Thus, any expansion of transactions in the DeFi world will likely only reinforce the dollar’s dominance.”
Waller’s view seems to be very different from many other people who believe that cryptocurrencies threaten the dollar. Even Waller has previously believed that people’s shift away from the dollar and into cryptocurrencies in the future could endanger monetary policy. However, his recent speech seems to conclude that this situation may not actually lead to a weaker dollar.
Earlier this month, Rep. Maxine Waters, D-Calif., said in a statement that U.S. lawmakers are working on stablecoin regulation. Waters noted that lawmakers are “very, very close” to a deal but did not specify details or timelines for upcoming regulations. She did mention, however, that the deal could give the Federal Reserve oversight powers. Maxine has been in negotiations with House Financial Services Committee Chairman Patrick McHenry for nearly two years.
Other stakeholders also believe that stablecoins need regulation. U.S. Treasury Secretary Janet Yellen said at a congressional hearing that such regulations would address issues in the cryptocurrency market and protect investors from market risks. She did specify that regulation should target stablecoins and “crypto assets that are not securities.”
USDT and Crime
Tether’s USDT, the world’s largest stablecoin and the third-largest cryptocurrency by market cap, recently reported excess equity of $5.4 billion, with cash equivalents covering 90% of all tokens issued in the fourth quarter of 2023. A recent report from independent audit firm BDO confirmed that Tether Holdings Limited added nearly $2.2 billion in excess reserves last quarter, bringing the total to a record high of $5.4 billion. The company’s excess reserves came from a massive $2.85 billion in net profits achieved as of December 31, 2023, the report said. About $1 billion of that came from accrued interest on U.S. Treasuries, with the rest coming from Tether Holdings’ gold and Bitcoin (BTC) reserves.
Despite Tether’s impressive numbers, its reputation has taken a bit of a hit. According to a January report from the United Nations Office on Drugs and Crime, the USDT stablecoin is the cryptocurrency of choice for illegal activity in Asia. The report states that criminals are using USDT for fraudulent activities, including money laundering and scams, a growing form of romance scams. #稳定币监管 #美元
