Key facts:
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The official states that it is necessary to monitor the market of stablecoins.
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For the Fed, the growth of stablecoins, which are not yet regulated, is worrying.
At the closing of the Forum of Official Monetary and Financial Institutions (OMFIF) on Friday, June 25, Boston Fed president Eric Rosengren described Tether (USDT) as a risk to the stability of the financial system.
In his presentation at the forum, Rosengren included Tether on a list of “challenges to financial stability” that the Boston Fed is closely monitoring, according to the official. Specifically, Rosengren mentioned USDT as one of the” new disruptors ” of short-term credit markets.
Caitlin Long, bitcoiner with a long experience in Wall Street, comment on Friday the presentation of Rosengren, with the Fed warning on Tether, and highlights that it is the first time that the regulator specifically refers to this stablecoin.
Long includes in his Twitter thread not only the pictures of the aforementioned presentation, it also shows two excerpts from an interview with Rosengren published last Friday by Yahoo News. The bitcoiner highlights that as every US dollar is settled through the SEC, the FED would have jurisdiction over all stablecoins. “It is important for the Fed to say this. Caveat emptor, friend». The Latin phrase is loosely translated as “buyer assumes risk”, or”sold as is”.
Rosengren says in an interview with Yahoo News that a “more holistic approach” is required when it comes to financial regulation.
I am concerned that the market for stablecoins, which is currently very poorly regulated, is on its way to becoming an important sector of our economy, and we have to take into account what happens when people leave this type of instrument very quickly.
Eric Rosengren, chairman of the Boston Fed.
The official claims that the stablecoins they are very similar to instruments prime money market, but qualifies them as riskier. “Just as money market funds caused a major disruption to credit markets, there could be financial stability issues if we don’t look at what would happen to stablecoins the next time we have a crisis in the markets.”
Stablecoin purchase capital would be flowing back into bitcoin, according to a metric released last Friday by Glassnode, and reported by CriptoNoticias that day. The so-called Stablecoin Supply Ratio (SSR)oscillator, it reached, according to Glassnode, its lowest level since October last year. This indicates that capital has been flowing back from stablecoins to bitcoin, Glassnode states.