High-ranking BoE executive criticizes stablecoins, saying they are not suitable for investors
- Per BoE executive, here’s the lack of stablecoins
- BoE seeks to tighten crypto regulation
Bloomberg reported that a Bank of England (BOE) official criticized stablecoins, saying they are volatile, especially UST and USDT.
“They are not stable.” A Bank of England official https://t.co/AvBatOeGjr says that stablecoins are not stable enough for widespread use by consumers as an alternative to traditional currencies.– Bloomberg Crypto[@crypto] 2 June 2022
Per BoE executive, here’s the lack of stablecoins
Andrew Hauser, executive director of markets at the Bank of England, recently noted what exactly stablecoins like USDT and Tether are lacking and what makes them unsuitable for widespread use by consumers.
That’s what he said today in his remarks for a panel organized by the Federal Reserve of New York.
According to him, UST and USDT do not provide enough real-time data regarding their value and details in how they manage to maintain convertibility to fiat.
“They are not stable,” he said, adding that holders of these digital assets need to bear in mind that they may face large financial losses on these cryptocurrencies.
Holders of such coins should at least acknowledge the possibility of themselves badly out of pocket.
BoE seeks to tighten crypto regulation
The BoE nurtures plans to tighten regulation of cryptocurrencies in the UK as the bank sees digital assets as an increasing risk to the global financial system. The crypto market is now worth $1.7 trillion, which is more than the subprime mortgage market before it collapsed in 2008.
Hauser added that regulators will pay special attention to stablecoins, whose use is increasing in popularity, and that the recent collapse of Terast and the volatility of the USDT peg suggest that this particular type of digital asset should be under more intense supervision. may be required. He said:
Buyer caution alerts may be sufficient for coins that are only in specific use, but they may not be sufficient for any reaching the systemic scale.
In the new rules that the BoE plans to implement, issuers can return their stablecoins with actual deposits at the central bank. He also said that if central banks start mining CBDCs (central bank digital currency) for retail investors, it is likely to create some complications for banks’ balance sheets.
Earlier, U.Today reported that the BoE was looking to hire an additional hundred employees to oversee the crypto market, and the central bank was looking to raise $419 million from local commercial banks.