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Is Bull Run In The Hands Of Stable Coins This Season? Traders Should Keep Eye On This !

Written by: Qadir AK

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Qadir AK

Qadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.

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Feb 3, 2022

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Highlights

    Draft discussion bill surfaces ahead of the stable coins hearing next week.

    The market cap of stable coins outperforms that of Bitcoin and the entire crypto market.

The crypto-verse has been longing for a moon run, bringing back the lost glory of the business. Which now seems to be lost amidst the dreary market cycle, from which the assets are yet to make a comeback. The business is in dire need of a catalyst, that would help assets rebound from the aftermath of the holocaust.

While mainstream cryptocurrencies, alongside the diverse sectors, have been lacking the zeal to initiate a bull run. Folks from the business are now factoring in the possibility of stable coins initiating one, owing to the catalysts in play. Successively, the draft discussion bill has surfaced ahead of the stable coins hearing next week.

Will Stable Coins Now Be An Official Alternative To USD? 

The U.S House Committee on Financial Services has its stable coin hearing next week. And the space has been witnessing parleys revolving around stable coins. An update coming in from a substantial source brings light on a draft discussion bill, circulated by Representative Josh Gottheimer. That would limit stablecoin issuance to depository institutions and qualifying non-banks that maintain USD treasuries.

It is learned from the source that, any person other than an insured depository institution may elect to become a non-qualified stablecoin issuer by bringing in trust the secretary of the treasury. The issuer would need to maintain collateral in an amount equalling 100% of the value. The collateral held by the non-bank issuer shall need to be held in USD, securities issued by the Federal Government.

In addition, any collateral held in USD is needed to be deposited by the non-bank stablecoin issuer in a segregated account with an insured depository institution.

The respective issuers would be supervised by the Treasury Department, and the secretary would issue rules and requirements. That would include Leveraged Ratio, Auditing Requirements, Redemption Requirements, and Liability Management Standards.

Are Stable Coins Now An Edge Over The Entire Crypto Industry?

Stable coins have come a long way from the past year, and have scripted phenomenal metrics. Running down the memory lane, in March of 2021 the market cap of stable coins was at $40 B, while that of the entire industry was at $1.375 T. Fast forwarding to this day, the market cap of stable coins is hovering around $112 B, while that of the industry is at about $1.675 T.

The purchasing power coming in from stable coins has grown close to 3 times, in comparison to the previous year. That said, the metrics of stable coins are those which are not locked in smart contracts. While the star crypto Bitcoin and the entire crypto market have returned to similar levels after a euphoric run. The market cap of stable coins has risen appreciably and has outperformed the industry. 

Summing up, while the split betwixt Committee Democrats and the recommendations outlined persists. Partisans believe the initiative to be a welcoming sign, for the industry. As if materialized as expected, it will empower mass adoption. 

Further enticing institutions to consider stable coins as a store of value, who are now more leaned towards mainstream cryptocurrencies. Moreover, the impeccable rise in metrics is overwhelming, as most of the traders employ stable coins as a trading pair, and to store the extracted profits.  

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Qadir AK

Qadir Ak is the founder of Coinpedia. He has over a decade of experience writing about technology and has been covering the blockchain and cryptocurrency space since 2010. He has also interviewed a few prominent experts within the cryptocurrency space.

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