Sherrod Brown, chairman of the Senate Committee on Banking, Housing, and Urban Affairs, has asked several cryptocurrency companies to disclose information related to stablecoin investor and consumer protection.
According to an announcement on November 23, Brown sent notices to Coinbase, Gemini, Paxos, TrustToken, Binance.US, Circle, Center, and Tether requesting information on stablecoins before Dec. 3, suggesting that he and other lawmakers may be preparing to hold a later hearing on the issue. The senator said investors “they may not appreciate the complexity and the different characteristics and terms of each stablecoin”as cryptocurrency platforms do not always provide users with the same protections that are provided to someone buying coins directly from an issuer.
“I have significant concerns with the non-standard terms applicable to the exchange of particular stablecoins, how those terms differ from traditional assets, and how those terms may not be consistent across digital asset trading platforms,” Brown said in the respective eight letters. .
The notice asks for basic information about the purchase, exchange, and minting of stablecoins, as well as the number of tokens in circulation and how often users exchange them for US dollars.. Brown’s notices to Coinbase, Center, and Circle requested information on USD Coin (USDC), Gemini on GUSD, Paxos on Pax Dollar (USDP), TrustToken on TrueUSD (TUSD), and Tether on USDT. He added that companies should define market conditions that would make it difficult, if not impossible, to exchange stablecoins for fiat money.
Thank you @SenSherrodBrown for the letter inquiring about the important topic of how stablecoin issuers protect consumers. I look forward to responding and working with you to ensure consumers are appropriately protected. https://t.co/RWWmI0erOA
– Jeremy Allaire (@jerallaire) November 24, 2021
Brown’s request for crypto companies follows a report by the President’s Task Force on Financial Markets suggesting that issuers of stablecoins in the United States should be subject to “appropriate federal supervision” similar to that of banks.. The group posited that the legislation was “urgently needed” to address the risks posed by stablecoins.
US regulators have cracked down on stablecoin issuers Tether and Bitfinex for allegedly not always backing their USDT with reserves. The companies had to pay $ 18.5 million in damages to New York State and submit periodic reports of their reserves. After the deal, Tether reported that a large amount of its reserves consisted of commercial paper.
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