Federal Reserve Vice President Lyle Brainard testified Thursday before a House committee on the benefits and risks of CBDCs, or central bank digital currencies.
Last month, the US Senate confirmed Brainard as the next deputy chairman of the Federal Reserve, sitting alongside Chair Jerome Powell. Terra’s (LUNA) recent crash still prompted regulators to demand tighter crypto sanctions, as the stablecoin lost its peg, taking billions of investors’ money with it.
“The recent turmoil in the crypto financial markets makes it clear that the actions we take now – whether it is on the regulatory framework or the digital dollar – must be robust to the future development of the financial system,” she said in her testimony.
Reality of stable coins
She continued by stressing “the need for clear regulatory railings” after the explosion of Terra.
Since the debacle with UST, investors have watched with bated breath as Deus Finance’s DEI token lost its peg, while Tether (USDT) traded at less than $1 for a few hours.
During his testimony, Brainard criticized the notion that stablecoins do not share the same security as commercial bank funds, as this type of security “may reintroduce meaningful counterparty risk into the payment system.”
Is US CBDC The Next Step?
Brainard believes that a US CBDC may one day coexist with stablecoins, which he told lawmakers during a hearing on the Financial Services Committee.
She also asked the House committee to consider the implications of issuing or not issuing a central bank digital currency (CBDC), suggesting that if the Federal Reserve is going to go ahead with a CBDC, it should be non-interest- Will give priority to impact. CBDCs or limit the amount a person can hold or spend.
“Under certain future circumstances, CBDCs may coexist with stablecoins and commercial bank funds by providing a secure central bank liability in the digital financial ecosystem, such that cash currently co-exists with commercial bank funds. is,” she suggested.
Talking about potential risk mitigation, Brainard says that US CBDCs “could be a potential way to ensure that people around the world who use the dollar are able to transact and trade with the US currency.” can continue to rely on the strength and security of the digital financial system.”
The Future of Terra on the Blockchain
The ecosystem is already hyped about what Terra’s future might look like, following Terra founder Do Kwon’s proposal to revive the blockchain by forking a new chain without UST.
Voting took place on Wednesday on the proposal, which would include new tokens given to previous UST and LUNA owners via airdrop.
There are reports of exchanges queuing up to list the new token amid predictions of price hikes. Crypto exchange Huobi tweeted its support for Luna 2.0, while OKEx also indicated the same ahead of the airdrop.
However, Binance said that it will “work closely with the Terra team” to ensure that users are treated fairly.
Andrew Thurman, Head of Content at Nansen, believes that predictions of price increases based on the inflow of the coin are unfounded. However, he believes those predictions may change as words continue to travel. Many experts claim that getting listed on multiple exchanges will also improve its liquidity.
Amid a flurry of activity around the network, the Terra founder denied reports that he had approached five exchanges in Korea to list LUNA 2.0.
“Luna 2.0 Will Show The World How Dumb Crypto Gamblers Really Are,” Dogecoin Founder Billy Marcus tweeted,
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