US House Conducts Hearing On Stablecoins On April 19 Amid Risk Concerns

Key Points:

• A hearing on stablecoins has been arranged by the US House of Representatives Digital Assets.
• The hearing is set to start at 10 AM ET on Wednesday, April 19, 2023.
• Rep. French Hill chairs the Digital Assets and Fintech Subcommittee.

The US House of Representatives Digital Assets, Financial Technology, Inclusion, and Capital Markets Subcommittee has scheduled a hearing to discuss stablecoins.

The subcommittee is part of the House Financial Services Committee. The hearing is scheduled to begin at 10 AM ET on Wednesday, April 19, 2023, and the topic of the meeting will be: Understanding the role of stablecoins in payments and the need for legislation.

The Digital Assets and Fintech subcommittee, chaired by Rep. French Hill, is a new subcommittee added after House Republicans took over the Financial Services Committee.

There are no specifics yet on who is anticipated to testify or any draft legislation, but this information should be accessible within the next several days.

As Congress mulls the future of cryptocurrency, a key trade organization is encouraging lawmakers to begin with stablecoin legislation.

Stablecoins have emerged as a prominent topic of disagreement in the crypto law discussion. The digital tokens are often linked to actual assets like the US dollar or gold, but they may alternatively be supported by a blockchain-based algorithm. An example of an algorithmic stablecoin is TerraUSD, which crashed in May and contributed to the recent Crypto Winter.

Although firms like Circle and Paxos claim that stablecoins serve an important service by providing consumers with an on-ramp into the crypto ecosystem and financial accessibility, policymakers have struggled with how to tackle the diverse and sometimes risky landscape.

Not just the United States but a number of other governments are becoming concerned about the ecology of stablecoins and their issuers.

Paxos, a fintech firm that provides blockchain-based solutions to the global financial sector, has declared its intention to exit the Canadian market.

The firm issued a statement telling clients that, from June 2, they would no longer be able to transact from their Paxos accounts, with the exception of withdrawing cash.

With the failure of Silicon Valley Bank, the stablecoin business has been under renewed investigation. SVB maintains a part of Circle’s USDC stablecoin reserves. Stablecoins are held at $1 by active arbitrage on worldwide markets. To ease minting and redemption, they depend on the backings of on-chain or off-chain assets.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

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Harold

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