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Stablecoins will be included in the financial system in the US

Stablecoins will be included in the financial system in the US
Written by Arindam
Stablecoins will be included in the financial system in the US

A special framework has been introduced to increase the transparency and security of stablecoins in the US. This is being called the Trust Act. With this, stablecoins are being officially included in the banking and financial system in the US. It will be the first western country to do so. The Trust Act aims to regulate stablecoins so as to increase their use in day-to-day payments.

Stablecoins are cryptocurrencies that attempt to link their market price to a reserve asset such as gold or common currencies. These are more commonly used for digital transactions that involve converting virtual assets into real assets. USD Coin, Tether and Binance USD are some of the popular stablecoins, which are pegged to the US Dollar. According to the Trust Act introduced by Senator Patrik Toomey, stablecoin issuers must obtain a license that makes them a legitimate financial entity. An application for this license has to be made to the Controller of the Currency (OCC) or a similar regulator.

In addition, stablecoin issuers will also need to be audited regularly. It should have a clear structure of the asset redemption policy. The Trust Act stipulates that stablecoin issuers must provide detailed information about the asset to which their stablecoin is linked. Dollar-linked stablecoins are specifically referred to as payment stablecoins in the Trust Act document. This act will be applicable only for these payment stablecoins. Stablecoins linked to commodities or virtual currencies will not be affected by this act.

Stablecoin, a rapidly growing version of crypto, has emerged as a major medium of exchange. It is often used by traders to remit funds. It is easy to exchange major stablecoins for bitcoin or other cryptocurrencies. Gold coins, a new variant of stablecoins, have grown in popularity in recent months. Gold coins are guaranteed with gold and are pegged to the dollar to reduce volatility. The largest of these, Pax Gold or PAXG, has gained 7.4 percent this year and its rival Tether Gold has gained nearly 8 percent.

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Arindam

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