- Binance is authorized to invest customer funds in short-term U.S. Treasury bills
- The decision was granted by the U.S. District Court for the District of Columbia
- There are supporters and principal opponents to this decision
- A third party will manage the investment
- Tether USDT has been proposed as the means
So, Binance has taken another significant step in the regulation of cryptocurrencies. The U.S. District Court for the District of Columbia has authorized Binance to invest customer funds in U.S. Treasury bills.
This all comes with several conditions:
- Investments are short-term and must be mature every four weeks
- Investments will be managed by a third party to ensure that the funds are not invested back into Binance
- Also, Binance must include the costs of maintaining these investments in its monthly reports
- Stablecoins, such as USDT from Tether, have been suggested as the primary means
- It held $72.5B in U.S. Treasuries, and they claim this over-collateralization is insurance in case of a massive collapse
What Are the Reasons and Consequences?
This should prolong the dollar’s dominance around the world and, as a consequence, the American economy’s leading role.
These initiatives are especially relevant to the instability of global political and economic processes.
Among them is the fact that the dollar link and the factors affecting it create many risks, such as interest rates, inflation, and a major economic crisis. It puts much pressure on the global financial system, making organizations accept risky assets or suffer significant financial losses and slowing other countries’ economic growth. An example is Japan’s economy, which you can learn about here.
These initiatives are also pushed by the frank desire of many countries, such as the BRICS, to eliminate dependence on the dollar for the above-mentioned related reasons.
However, there are great supporters of such initiatives. For example, Former Speaker of the U.S. House of Representatives Paul Ryan suggested considering stablecoins as insurance against the crisis and to strengthen the dollar’s position in the world economy.
There are also principled opponents, reminding that this goes against the original purpose of cryptocurrencies and the main ways of their use. For example, Alex Gladstein, the chief strategy officer of the Human Rights Foundation, believes that such stablecoins linked to the dollar, strengthening the centralized fiat economic model, will establish it permanently. And we will never be able to eliminate its shortcomings, allowing cryptocurrencies to help us fully transition to decentralized finance.
What Are the Main Conclusions?
The pros and cons previously expressed by influencers are pretty valid and worth paying attention to.
The good news is that cryptocurrencies are actively evolving, have recently been leveraged by the frontrunners of the world’s first economies, and are beginning to be introduced into more key areas.
All of this may suggest that regardless of the direction, crypto’s development and adaptation are not only standing still but accelerating and will become increasingly integral to critical areas of economics, politics, and technology.
The main thing is that everyone continues to have open access to it and that its application continues to fulfill its original function of making finance transparent, reliable, and fair.
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