Regulation: Jake Chervinsky: US Must Not Endanger Cryptoconduct | news

• TerraUSD collapse shakes confidence in stack coins
• Call for stronger regulation
• Jake Chervinsky emphasizes the importance of stack coins

In mid-May, TerraUSD, whose exchange rate should actually be pegged to the US dollar, collapsed massively. Actually, such quotes should be impossible with stablecoins, but while most other stablecoins providers have financial reserves, for example in US dollars or gold, which cover the token and thus secure the price commitment, TerraUSD is a “decentralized” stablecoin. A complex mechanism for trading transactions with other cryptocurrencies should automatically keep the exchange rate at one US dollar per dollar. TerraUSD. There are no real US dollars behind Terra, but cryptocurrencies.


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call for regulation

Against this background, the call to push the regulation of the crypto sector is getting higher and higher. Among other things, the US Federal Reserve recently warned of a fall in the price of stack coins.

The German Federal Financial Supervisory Authority (BaFin) also sees increasing threats to the general stability of the financial market from crypto turbulence. According to BaFin chairman Mark Branson, while the Terra crash has had little impact on the traditional financial industry, future cryptocurrencies may be different. Speaking at BaFin’s Fourth Technology Conference, Branson said of a potential merger of the previously separate areas: “We do not see that at the moment, but it may go in that direction in the future as the interdependencies with the traditional financial system become even. . closer”.

Warning against incorrect regulation

However, according to CoinDesk, Jake Chervinsky, head of policy at the Blockchain Association, calls for a “smart, thoughtful discussion of potential regulation” in this context. He recalls that despite the recent turmoil, stack coins are an important innovation that offers several benefits to users. In this way, they would improve the efficiency of payment transactions, reduce costs and speed up business processes. They would also make the financial system more inclusive by giving everyone and everywhere the opportunity to participate.

“Stablecoins provide too great an opportunity for us to risk making mistakes in regulation. The United States is in an international race to become home to Web 3, so now is the time for strategic thinking and prudent action. The United States’ future as a hub for global cryptoinnovation is at stake, “Chervinsky said.

The further procedure

Jake Chervinsky now advises those in charge to move forward in three steps: First, regulators should develop a deeper understanding of stack coins and also obtain the opinion of industry representatives such as the Blockchain Association.

Then a consensus should be developed in the US Congress, supported by both parties. According to Chervinsky, the cryptocurrency is too important to be fought for. Therefore, it is necessary that the leaders of both parties come together to find a solution on how the crypto market can best be regulated. It is important that such a solution is ultimately decided by Congress, not by the regulatory authorities.

Finally, care must be taken to ensure that the rules adopted are balanced and take into account the important role that US dollar-dominated stack coins will play in keeping US finances secure in the coming decades. “We need a tailored regulatory framework that takes into account the specific benefits and risks of stack coins,” Jake Chervinsky said, according to CoinDesk.


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