FTX potential collapse calls for greater federal oversight of the digital asset industry
The FTX saga affected all the crypto assets in the markets, including stablecoins which destabilised for a while. US legislators responded with concerns and a stronger push for legal protection regarding crypto customers.
The world’s dominant stablecoin, Tether temporarily declined to $0.97 on Nov. 10 as news arrived about a “financial black hole” in FTX assets. USDT redemptions surpassed $600 million over the past two days, giving rise to suggestions that FTX and its sister company Alameda Research were attempting to short USDT.
Circle’s USD Coin redemptions topped $1 billion. The stablecoin fell to $0.97 very briefly before regaining its peg. TrueUSD (TUSD) destabilised to $0.98, the same as BinanceUSD (BUSD), while Pax Dollar (USDP) dropped as low as $0.96. Although most fiat-backed stablecoins regained their ground, USDD stablecoin backed by Tron’s algorithms is still derailed, trading at $0.98 at the moment of writing.
The crypto market volatility attracted the attention of US legislators. Thus, senators Debbie Stabenow and John Boozman have doubled down on their commitment to publishing a final version of the Digital Commodities Consumer Protection Act 2022 (DCCPA), introduced to the US Congress in August.
If the DCCPA passes into law, it would grant the Commodity Futures Trading Commission (CFTC) more regulatory powers over the crypto trading sector. The DCCPA bill has been strongly supported by FTX CEO Sam Bankman-Fried.