NY Legislator Suggests Fiat-Pegged Stablecoins For Bail Payment
On May 10, Latrice Walker, a Democratic lawmaker from New York, proposed a bill that outlines the current ways to pay for bail bonds. The proposed legislation aims to expand the accepted forms of payment to stablecoins collateralized with fiat.
The Stablecoin Bill
It remains uncertain which stablecoins fall under the “fiat-collateralized” category would be approved by authorities in New York and which may not be considered suitable as a payment method for bail bonds.
It could be recalled that last December, FTX’s founder, Sam Bankman-Fried, was granted bail but on house arrest till his criminal trial, set for October 2. Two guarantors made this possible by providing a bail of $250 million to the appropriate federal court on behalf of the embattled FTX founder.
On May 5, Letitia James, Attorney General for New York, suggested regulations granting the state more regulatory oversight over cryptocurrency exchanges. It is worth noting that this new bill was introduced less than a week after the New York Attorney General proposed it.
The proposed bill highlights the state administration’s inclination towards incorporating stablecoin payments into its criminal regulations. Nevertheless, James has taken a tough stance on crypto in the last few months.
New York’s Attorney General has been actively pursuing legal action against individuals and entities related to the crypto industry. For instance, on January 5, she instituted a legal action against Alex Mashinsky, the ex-CEO of bankrupt crypto lending firm Celsius.
More recently, on March 9, James sued KuCoin, a top crypto exchange with headquarters in Seychelles, for allegedly engaging in the sale of securities despite not having official approval.
Tether Sees All-time High on USDT Reserves
Meanwhile, Tether, the largest issuer of stablecoins, published its first quarterly assurance report on May 10, revealing a significant rise in excess reserves. The report showed that Tether’s reserves surplus had reached a milestone of $2.44 billion, representing an increase of $1.48 billion in the first quarter of 2023.
Moreover, the firm’s recent Consolidated Reserves Report stated that the stablecoin issuer had consolidated assets worth $81.8 billion at the quarter’s close.
Tether’s report also disclosed that a significant portion of its reserves had been invested in US Treasury Bills. In addition, the company stated that it had reduced its reliance on banks to maintain its reserves.
According to Tether, its reserves are highly liquid, indicating that they can be readily converted into cash if required. The company also disclosed that most of its investments comprise cash, cash equivalents, and approximately 85% in other investment portfolios.
Tether also stated in the report that it had decreased its exposure to secured loans, which accounted for 8.7% of its reserves, to 6.5%. The company further revealed that gold and Bitcoin make up roughly 4% and 2% of its total reserves.
Furthermore, the report stated that all new token issuances were invested in US Treasury bills or injected into overnight Repo. Paolo Ardoino, Tether’s chief technical officer (CTO), noted that the firm would continue monitoring the risk-adjusted returns on all investment portfolios as the broader market changes.
Circle CEO Jeremy Allaire announced a recent update regarding the company’s USDC reserves. To safeguard against any possible risk of US debt default, the firm made adjustments by moving towards short-dated US Treasuries.
Allaire noted that the USDC stablecoin issuer is not ready for any exposure from a potential US government failure before it can settle its debt obligations. At the time of writing, Tether commands a significant market share of 62% and has a circulating supply of 82 billion USD.
Since the start of this year, Tether’s market capitalization has seen an impressive 24% increase, while its competitors have experienced a steady decline.
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