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US regulators consider imposing full KYC on transactions with stablecoins

  • Stablecoins are considered potentially dangerous for monetary stability in the recent White House report.
  • The cryptocurrency market reacts with massive selling across the board.

Stablecoins may pose risks to "international monetary stability", according to the US Working Group on Financial Markets.

In the recent statement, the Treasury-based working group that makes recommendations federal regulators recommends taking actions to ensure that stablecoins do not undermine the confidence in national fiat currencies.

Treasury Deputy Secretary Justin Muzinic commented in a statement:

The statement reflects a commitment to both promote the important benefits of innovation and to achieve critical objectives related to national security and financial stability. Regulators will continue to look closely at stablecoin arrangements, and look forward to a future dialogue on these issues.

The regulators also made it clear that stablecoin issuers should perform on-chain KYC (Know Your Customer) verification among the parties, including unhosted wallets, to comply with anti-money laundering and counter financial terrorism measures. 

This requirement correlates with the Financial Crimes Enforcement Network proposal to require KYC for self-custody wallets. The authority launched public consultations on the proposal. As FXStreet previously reported, the largest US-based cryptocurrency exchange Coinbase forwarded a request to extend the consultation period from 15 to 60 days to allow the parties involved to express their opinion.

The cryptocurrency market goes deep into the red

Meanwhile, the cryptocurrency market is gripped by fear. All significant altcoins incur significant losses as the bearish sentiments are spreading like wildfire. Over $30 billion were erased from the market in less than 24 hours. At the time of writing, BTC is changing hands at $23 000 down about 1.5% on a day-to-day basis. ETH dropped below $600 to trade at $580. XRP hit the recent low of $0.21 before recovering to $0.26 by press time.
 

Author

Tanya Abrosimova

Tanya Abrosimova

Independent Analyst

 

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