Digital Coins Scrutinized before Treasury’s Strict Cryptocurrency Oversight Talks
Treasury officials are losing sleep over the rapid rise of Tether and other digital coins.
They believe the upsurge of cryptocurrencies poses a huge risk to the economy thus warranting stricter oversight rules — which they now eagerly recommend.
The officials are crafting a policy framework aimed at protecting investors when moving money from one digital token to another. And they plan to release it in a few weeks. The people privy to the details of this framework sought to remain anonymous, for now.
However, they’re also fearful that the cryptocurrencies surge could threaten financial stability. Many digital coins are now scaling up too fast and with no regulations.
Regulators set to clamp down crypto industry
Financial regulators in Washington are set to crack down on the rapidly growing crypto industry in the coming days. So, the treasury’s recommendations will come in handy. Creating a roadmap and clear steps on ways to implement severe restrictions.
Treasury officials are also discussing methods to launch a formal Financial Stability Oversight Council review on whether digital currencies certainly pose an economic risk. The review could prompt even more severe oversights on crypto.
Digital tokens such as Tether — with their values often pegged on the US dollar — are at the pinnacle of the crypto market as they’re used to buy other digital coins.
According to CoinMarkertCap.com, over $120 billion digital tokens are in circulation. These digital coins mimic traditional bank products such as saving accounts. But hardly protect consumers from risks. Or, guarantee actual protection of your money.
Treasury monitoring digital tokens transactions
Treasury officials are now closely monitoring how digital currencies are processing and settling their transactions. And whether market conditions prompt any changes.
Although the officials are paying special attention to Tether and its peers, they’re deeply worried about the uptick in digital coins sponsored by social media giant, Facebook Inc.
Recently, Facebook Inc. announced major plans to launch a cryptocurrency and crypto digital wallet — Diem and Novi digital project.
Treasury is, however, adamant to release details of the reports on special monitoring of digital tokens. But it’s believed that the Treasury Department held meetings with other agencies last week, to examine economic threats posed by digital tokens.
Financial regulators often regard the cryptocurrency market as the new-age shadow banking and a rogue Wild West of finance. That explains why they want to nip the bud of crypto markets and regulate the market and its transactions.