Crypto community fights back against Bank Policy Institute’s stablecoin rewards ban
The crypto community has slammed the Bank Policy Institute's (BPI) stance on stablecoin rewards, deeming it 'narrow-minded' and dishonest. Meanwhile, the crypto market continues to flourish, surpassing $300 billion in market cap and handling transactions worth over $1 trillion, despite regulatory hurdles.
BPI recently warned against stablecoin rewards, citing potential liquidation cascades and market contagion. This stance has drawn intense criticism from the crypto community, which flooded the Senate with over 90,000 emails in protest against the proposed ban in the Market Structure Act.
BPI's proposed solution is to outlaw stablecoin rewards to preserve financial market stability. However, the crypto community has countered this, advocating for increased transparency in decentralized finance (DeFi) instead of an outright ban. They argue that this would better address the risks associated with leveraged plays in DeFi stablecoin yields, as demonstrated by a fund's $93 million loss due to a stablecoin depegging event linked to Stream Finance.
BPI also expressed concerns that unregulated stablecoin yields could exacerbate liquidation risks in the crypto market and potentially spill over into traditional markets as the sector becomes more integrated.
The crypto community's backlash against BPI's proposed stablecoin rewards ban continues to grow. While BPI warns of liquidation risks and market contagion, the crypto community calls for enhanced transparency in DeFi. The future of stablecoin rewards remains uncertain as the crypto market continues to evolve and adapt to regulatory challenges.
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