Treasury Fires Warning at Stablecoin Issuers
The US Deputy Secretary of the Treasury, Wally Adeyemo, has warned about the dangers associated with stablecoin issuers from outside the country, which rely on the USD to back their assets. Adeyemo stressed that foreign stablecoin issuers should only be allowed to bank on the US dollar if they are to be held accountable.
Therefore, regulators should implement robust measures to stop dishonest people from abusing their stablecoins. Adeyemo’s remarks came in a speech he delivered at an event hosted by the Blockchain Association in Washington, DCDC.
Stablecoins are virtual currencies with minimal price volatility supported by a reliable fiat currency like the US dollar or Euro. They serve as a store of value and a medium of exchange in the digital transaction landscape.
Regulators, however, are concerned about the rapid rise of stablecoins because they may endanger consumer protection and broader financial stability. Adeyemo’s remarks coincide with regulators’ increased global scrutiny of stablecoins.
Several jurisdictions, including China, have taken action in recent months to regulate these types of virtual tokens.
Curtailing Criminals’ Access To Cryptocurrency
Stablecoin regulation has also been implemented in the United States based on a recent report published by the Treasury Department. The report suggested requiring stablecoin issuers to be insured depository institutions governed by robust oversight at the holding company and depository institution levels.
Adeyemo referenced a speech he made last year about the need for the sector to take proactive steps to stop terrorists, rogue entities, and transnational criminal organizations from accessing cryptocurrencies. However, despite regulatory requirements, he voiced his disappointment that the industry has yet to meet these objectives.
While some platforms have taken action to stop illegal activity, others are still a risk to the United States’ national security and need accountability.
The Binance-DoJ Settlement
Meanwhile, Adeyemo shared his insights about the recent settlement between US authorities and Binance. The official also opined that the platform was being used by terrorists, drug traffickers, and other malicious entities to evade US sanctions.
Adeyemo added that the US regulators will track down some players in the crypto sector who are ignoring their legal obligations and helping illegal activities to thrive through their platforms. More importantly, such platforms will pay the price for their involvement in illicit transactions.
Adeyemo’s remarks follow heightened scrutiny of leading crypto exchanges and their lack of compliance with laws meant to stop illegal activity. The indictment of Binance, one of the biggest cryptocurrency exchanges in the world, heightens ongoing concerns about using these platforms for unlawful activities.
The Treasury official’s remarks highlight the authorities’ will to take decisive action against any organization or person that facilitates illicit activities via their crypto platforms. This determination aligns with initiatives worldwide to ensure cryptocurrency market players adhere to appropriate regulations that disallow all illicit financial transactions.