Bitcoin on the edge: A stablecoin ban might be incoming

Brutal for the Bitcoin and crypto market
In a document released yesterday, the Financial Stability Board (FSB) raised concerns about stablecoins in the global financial market. Since stablecoins “increase the efficiency of the provision of financial services,” this is a problem for the status quo.Widespread adoption would, in their opinion, lead to an independent financial system beyond their control. It could even replace fiat currencies and “exacerbate the bank rush”.The fear of the risks that the stablecoins used by the crypto market pose to financial stability has long been confirmed by countries like China and France. The French AMF said last week that the EU should create special regulations for stablecoins, as these pose “systemic risks” for the Union.The recommendations go so far that local authorities should completely ban stablecoins when needed, including those that run on fully decentralized systems such as crypto networks such as Ethereum.

 

Crypto market could suffer heavily from a stablecoin ban
Banning stablecoins could indeed be very scary. First of all, it would paralyze practically the entire DeFi movement and projects like MakerDAO and Compound. Even worse, it could trigger an overarching liquidity crisis across the market.Just think of stablecoins like Tether (USDT) and TrueUSD (TUSD), both of which are deposited with the US dollar. For many users around the world, stablecoins are vital when trading Bitcoin.