Stablecoins are on the radar of regulators

What are stablecoins?

Stablecoin is a cryptocurrency that is tied to fiat money at a 1:1 ratio (usually, but not always). Because all cryptocurrencies are very volatile nowadays, the developers reasoned that a stablecoin tied to a steady fiat currency should be stable as well. As a result, stablecoins attempt to blend the greatest aspects of cryptocurrency and fiat money. In reality, stablecoin can be linked to any asset other than fiat currency. As a rule, crypto traders use stablecoins to fix profits and protect balances from drawdowns when the value of the assets rises. The stablecoins market boosts the legitimacy and acceptance of cryptocurrencies in general. Also, some institutional investors use stablecoins, enhancing the industry’s overall turnover and profitability for smaller investors.

Why regulate stablecoins?

The high level of capitalization reflects the market’s importance in the international arena. The market capitalization of stablecoins: $144 billion with a total cryptocurrency market capitalization of $3 trillion. Trading volume — $91 billion compared to $176 billion for the total bitcoin market. As a result, several nations’ regulatory agencies have taken on the challenge of developing a regulatory framework for stablecoins.



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