Factbox: Five reasons U.S. regulators think stablecoins threaten the financial system

 Factbox: Five reasons U.S. regulators think stablecoins threaten the financial system

Nov 1 (Reuters) – A group of U.S. regulators on Monday called for Congress to regulate issuers of “stablecoins” like banks, arguing in a report that this emerging class of digital asset could pose a risk to the broader financial system. read more

Stablecoins are a type of digital asset pegged to traditional currencies, with a relatively small market value of around $127 billion. Here is why regulators think they threaten the system:

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Currently, stablecoins are mostly used to facilitate trading, lending or borrowing of other digital assets, generally on or via digital asset trading platforms.

But across the market, stablecoins have a range of policies governing such issues as disclosures, what assets are held in reserve to back the coins, redemption rights and operational controls. That could make them susceptible to a loss of investor confidence, particularly in times of market stress, the report said.

Once a stablecoin run…

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