The crazy week of stable coins. The last few days have been very…
By: Gianmarco Guazzo
Tags: Ethereum, Blockchain, Cryptocurrency, Visa, Stable Coin

The crazy week of stable coins

The last few days have been very interesting for the world of cryptocurrencies and for developments in the Stable Coin area.

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Visa has entered into a very interesting partnership by entering the world of Stable Coins, in the US there was a proposal for the so-called “Stable Act” to regulate the issuance of stable coins and then Tether has registered very high volumes in terms of capital moved in just 24 hours. Let’s try to clarify and deepen what in effect seems to be spring and hell for Stable Coins.

Visa, Circle and USDC

As it is known within the crypto world, Visa has always been in favour of the sector with numerous “Crypto Cards” anchored to its circuit. On December 2, Visa announced a partnership to connect its payments network, with over 60 million merchants, to the Startup Circle Internet Financial at the head of the Stable Coin USDC (US Dollar Coin).

In this way, the credit card giant enters the Ethereum world by right, allowing its customers to exchange USDC in exchange for services of any kind. Not only that, in addition to the possibility of spending and receiving USDC, Visa will give its customers the possibility to create a wallet dedicated to the Stable Coin in order to facilitate the exchange. The USDC was minted in 2018 and is pegged to the dollar value at a 1: 1 ratio. The reserves are controlled by the accounting firm Grant Thornton, guarantor to enforce that the actual amount of the asset in circulation is at least equal to the dollars supporting the assets.

The US Congress wants to regulate Stable Coins

As mentioned above, this appears to be the Stable Coin Week. After the very interesting news of Visa, the United States Congress has arrived to calm the spirits. In fact, legislation has been presented and proposed to definitively regulate Stable Coins called the “Stable Act”.

In essence, the proposal is designed to restrict the freedoms of private institutions for the issue of so-called private coins. The act develops four fundamental points:

- requires any issuer of a Stable coin to obtain a banking license,

- requires issuers to follow banking regulations according to the jurisdictions and regulations in force,

- requires any company or bank that issues Stable coins to obtain the approval of the FED, the FDIC and the appropriate banking agency 6 months before the coins are issued,

- requires any Stable coin issuer to obtain FDIC insurance or in some way maintain its reserves with the Federal Reserve to guarantee 1: 1 conversion with USD at any time.

As we can well guess, this regulation comes in a straight leg towards all the private institutions behind the various Stable coins. Any Stable Coin that evades these rules will be deemed illegal in the United States.

The volume transacted on Tether reaches astronomical figures

The latest news in the world of Stable coins concerns Tether, the fourth-largest cryptocurrency by market capitalization. In the last few days, there has been a significant increase in its capitalization as well as in the daily transaction which has reached the record figure of 43 billion in just 24 hours.

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Stable and its transparency has always been in doubt as there is a fear that the transaction is not actually supported by existing bank reserves. In addition, as we know, very often the increase in the price of Bitcoin has been correlated with an increase in the circulation of USDT. In short, the situation is not clear and must be kept under control. Stable coin market shares are currently in the hands of USDT, so its influence in the crypto world is not to be underestimated.

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