With a market capitalization of approximately $7.5 billion, the Maker’s Dai token is the 12th largest cryptocurrency overall and the 4th largest stablecoin behind Tether’s USDT, Circle’s USD Coin and Binance USD.
However, if the two U.S. Senators introduced the bill in June, “Responsible Finance Innovation Act— Dai will cease to be a “payment stablecoin” if it is finally signed into law.
See also Senate Crypto Bill Debuts, Crypto Industry Wins Big
so what? A rose by any other name may not even be a flower when it comes to the classification of financial assets, including digital assets such as cryptocurrencies and stablecoins.
Also, given that the bill defines stablecoins for payments, Dai may no longer be legal in the United States.
This is because a “payment stablecoin” is defined as a digital asset that:
A) May be exchanged 1 for 1 for USD denominated securities, if desired.
B) defined as legal tender [U.S. law] or under foreign law (excluding digital assets);
C) Issued by an entity;
D) accompanied by a statement from the issuer that the asset is redeemable…from the issuer or another identified person;
E) is backed by one or more financial assets (other than other digital assets) consistent with subparagraph A); and
F) Intended for use as a medium of exchange.
However, Dai is backed by other digital assets (such as Ether and USD coins) and locked into smart contracts that are used as collateral to maintain a 1:1 peg between Dai and the US dollar.
Related: The DeFi Series: What Are Algorithmic Stablecoins? DAI and fiat dollar pegs
In other words, it is an algorithmic stablecoin. Not much like TerraUSD, he wiped $48 billion from the crypto economy when LUNA, the partner token used to maintain the peg, collapsed after his one-week run in May. It is an algorithmic stablecoin.
read more: $45 Billion Stablecoin Crash Confirms Worst Concerns About Crypto Reserve Needs
Please note Sections A and E.
According to the bill, they “must be issued by a depository” [which] High-quality liquidity must be maintained…representing at least 100% of the face value of the institution’s liabilities in payment stablecoins issued by the institution. ”
CASP or VASP?
It may or may not happen this year, but soon the US will follow the European Union. The European Union is expected to finalize the terms of the Broad Crypto Asset Market (MiCA) Regulatory Framework Bill and pass it into law. soon.
mica Define “Crypto assets” as “digital representations of value or rights that can be transferred and stored electronically using distributed ledger technology or similar technology.”
This is because the Financial Action Task Force (FATF), the international body responsible for setting financial regulations, has Define “Virtual Assets,” which are “digital representations of value that can be digitally traded or transferred and that can be used for payment or investment purposes.”
again, so what? MiCA’s definition of a “crypto asset service provider” or CASP is different from the FATF’s definition of a “virtual asset service provider” or VASP.
MiCA’s CASP definition is broader than the FATF’s VASP, according to To Sygna, an anti-money laundering provider. The company said this is “to ensure that MiCA is applicable to most cryptocurrency companies and future-proof for market niches that do not yet exist.”
The problem is, being a VASP comes with many legal and due diligence requirements and responsibilities. Where does a CASP fall under? And who wants to find out the hard way?
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