The US regulators are concerned about the risks to investors emerging from the growing stablecoins market, who are immune to high market volatility, according to the report released by Bloomberg on Wednesday.
- In May, the overall market capitalization of the stablecoins increased to over $100 billion.
- Fed officials and legislators have expressed concerns that consumers are not protected in case of firms not having support by real-money reserves.
- The growing value of stablecoins has led to a market situation whereby the coins can be exchanged without passing through the U.S banking system, potentially allowing for illicit finance.
The consumers’ money held in stablecoins are not protected by the US Federal Deposit Insurance Corporation, increasing the risks of losing money.