Hello everyone...
When bitcoin and all altcoins were created and launched in the market they were very successful, but due to volatility Stablecoin was created, cryptocurrencies anchored to the $1 price and this is very useful as market fluctuations do not affect stablecoins. That is why in this new bloodbath where the main cryptocurrencies are losing value by billions, many are liquidating their investments in bitcoin or eth and are moving them to defi farms where stablecoins can be bet without losing almost nothing of the total value they invest.
Another advantage of stablecoins is that as they are coins anchored to the price of a dollar they should not have problems with laws or regulations, as they are considered less risky investments. But recently the US financial authorities have also taken the step to introduce "regulations" (restrictions) or as I prefer to call it a new hunt for stablecoins.
In a Reuters article: Yellen urges quick U.S. adoption of stablecoin rules, it talks about a meeting Yellen mainly discussed the growing threat posed by the stablecoin system, since as a cryptocurrency anchored to the price of a US dollar this would bring serious financial problems to the country if this starts to get out of control (control that the government seeks) so much is the problem that the stablecoins present against the US government that they compare it to a national level threat, such as the invasion of Thanos or a war from china.
But why are stablecoins now in the eye of the hurricane? Because currently the market capitalization of the most popular stablecoins in the market combined exceeds 110 billion dollars and the daily volume of TETHER alone exceeds the daily volume of Bitcoin and Ether. As there is a lot of money at stake and it is money that is not being controlled by the state, they think it can be used for other more harmful purposes towards the population such as criminal money laundering or to finance terrorism without the authorities knowing or they can also overturn the financial system causing many of the markets to go down.
But before we put on our aluminum hats and believe all this crap, let's think about what are the real intentions of these new regulations against the other part of the big cryptocurrency market:
Everything is absolute control: When I read the article and saw how very concerned Yellen was about the loss of economic control, I saw where this issue was going. And it is obvious to note that the government has seen how many US citizens have massively migrated to cryptocurrencies due to the huge pandemic crisis and the growing inflation in the economy, so they have implemented an open campaign against cryptocurrencies of all kinds, and in a sense, they have won as many people have left their crypto, but others knowing that it is just another market move have made use of stablecoins and have stayed afloat and this is something that the government still does not like.
They are losing the race: Another point that you can understand by reading this Reuters article, is that as we can see the race for the digital, controllable, and state-controlled dollar, they are losing it with the stablecoins. Since in this new digital era many countries are moving forward to make their digital currency have more economic sovereignty, then the most economically powerful country in the world already has a digital dollar but the state does not control it. That is why I think that what they want to achieve with these regulations is to control this established system that already had years of success to win the race against China.
They act before they are useless: As we have seen in the last 10 years banking activities have been decreasing at a steady pace and with the arrival of the pandemic and confinement as this trend accelerated even more, and as taskmaster4450 explained to us a few weeks ago, people prefer to use applications where you can move your funds faster or get loans without even using the bank, and as we know stablecoins follow this same pattern and are perfect to stay away from the traditional financial system, as you can invest any amount of money you want in any defi very easily without the need of third parties. And as this affects and threatens the economy they will put all the regulations they want or see fit.
Conclusion
Of course, you also have to take into account that many of these stablecoins are highly centralized or not at all reliable since for example the TETHER only has 5% of its coins backed by physical money. But despite these clear disadvantages they are still quite widely used today, and as we said before they have more daily volume than bitcoin and Ether combined.
I think, in the end, governments will continue to put regulation after regulation and go where the money moves the most because since they don't control it, it's a threat. After all, it's clearly against them.