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The influence of stablecoins is spreading, the Central Bank of the Union…

The influence of stablecoins is spreading, the Central Bank of the Union...

The European Central Bank (ECB) calls on the European Union to implement the regulations stable coins between countries. Because, stable coins increasingly influential in the digital asset market.

Although the ECB considers the crypto market separate from the global economy, there are potential systemic risks as the market share of stable tokens grows.

Stablecoins in the eyes of the European Central Bank

The ECB emphasizes the need for international standards for stable tokens, especially consistency across countries. Because this is considered to be able to cross between countries in seconds.

The central bank reminded regulators not to assume that the economy will be immune from the impact stable coins. If this token becomes more popular, it can affect all industries.

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The ECB highlights the role stable coins as a source of liquidity in the digital asset market. Currently, most crypto traders use stable tokens such as Tether USD (USDT) and USD Coin (USDC) as a substitute for currencies. fiat.

Millions of crypto users use stable tokens to maintain purchasing power, make transfers between exchanges, value derivatives and purchase other digital assets.

The ECB estimates that half of Bitcoin trading (BTC) and ether (ETH) to use stable coins.

The main problem with the popularity of stable tokens is that there is no guarantee of funds. Each publisher will use the guarantee of legal contracts, documents and explanations on the site.

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Tether has modified the original contract language to claim that it keeps one USD in a bank account for every USDT issued. After the request was reviewed by the Attorney General of New York, USA, Tether now guarantees each USDT with different means.

Stablecoins others have failed, including Terra UST ( UST ), Basis ( BAC ), and dozens of others. Large stable tokens are not exempt from stake failures, including USDT ever traded below $1.

Protea launch, the ECB warns of a failure of one in five stable coins the biggest impact on the main financial sector.

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The Financial Stability Board (FSB) echoed similar sentiments on Monday (7/11/2022) and called for regulation for stablecoins as part of international digital asset regulations.

In addition, the ECB said that a weak regulatory framework is leading to uncertainty for payment processors. The difference in transaction speed between blockchains is another issue, where some stable coins switching from Ethereum was considered slow and expensive.

The ECB supports the European Union’s proposal to regulate the digital asset market. This arrangement is considered an urgent issue for financial stability. The best advice is to enforce the law stable coins international. [ed]

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