The FED Board says the market turmoil shows a structural fragility of crypto and the report is a preview of Jerome Powell’s testimony in Congress next week so let’s read more today in our latest cryptocurrency news.
The report is a preview of the FED chair Jerome Powell’s testimony in Congress next week and he is expected to outline the plans of the Federal Reserve to combat inflation. Powell also announced a 75-basis point rise in the short interest rates as the largest icnrease in 28 years. The report was submitted to the President of the Senate and the Speaker of the House of Representatives and elaborated on how the stablecoins are not backed by safe and sufficient liquid assets whcih are not subject to regulatory standards that create risks to investors and the financial system, including susceptibility to destabilizing the runs.
The TerraUSD stable coins collapsed in a dramatic fashion last month and lost all of their value. The report pointed to the concentrated nature of stablecoins in which Tether and USD Coin constituted more than 80 percent of the market value and grew fast over the past year to $180 billion. The FED Board noted in the reprot that the vulnerabilities may be exacerbated by a lack of transparency regarding the risks and liquidity of the assets backing stablecoins.
The report added that the PResident’s Working Group on the Financial Markets, the Federal Deposits Insurance Corporation, and the OCC all made recommendations to address prudential risks that are posed by stablecoins.
As recently reported, Novogratz believes that Jerome Powell’s policies could be detrimental to the market’s growth. In an interview with CNBC, Novogratz hinted that Powell didn’t really understand the political and the economic reality of the US so the markets have a pessimistic view about his tenure. Speaking about the crypto market, Novogratz said that people are getting quite bearish on crypto after Powell’s re-appointment especially after he made some changes in the “macro story.” The United States is experiencing its highest inflation in over 30 years at 6.2% annually, so now we can all see the consequences that are starting to shockwave around the world with 39 of the46 world’s biggest economies showing higher inflation year to year.
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