- 1 New legislation is being proposed in New York to permit stablecoins to be used for bail bonds.
- 2 However, the legislation says nothing about which stablecoins would be used or when.
On May 10, New York Assembly Bill 7024, a bill to modify the statute, was presented. Its goal is to develop rules that will allow stablecoins to be used as collateral for bail.
The statute listed the accepted payment options for bail bonds at the time, which included cash, insurance, and credit cards.
However, it intends to change the legislation to include fiat-collateralized stablecoins as a new payment option. It was not stated which stablecoins will be authorized specifically.
The Strict Crypto Regulations in New York
Step adheres to NYAG’s crypto rules Letitia James, the NYAG, has suggested enforcing controls on cryptocurrencies. James put up “landmark legislation to tighten regulations” on the state’s cryptocurrency businesses on May 5.
The Crypto Regulation, Protection, Transparency, and Oversight (CRPTO) Act would mandate independent public audits of cryptocurrency exchanges.
Additionally, it would forbid people from owning the same businesses, such as brokerages and tokens, to prevent conflicts of interest. Exchange-issued tokens would be subject to constraints imposed by the conflict-of-interest provision.
- Require cryptocurrency businesses to reimburse clients who have fallen prey to scam.
- demand independent and open audits of cryptocurrency businesses.
- Stop those who create cryptocurrency assets from also owning cryptocurrency platforms.
- Avoid letting cryptocurrency firms borrow or lend investor assets.
- Describe the risks and potential conflicts of interest facing cryptocurrency startups for investors.
- Give the NYAG office the authority to impose these regulations and shut down businesses that don’t comply.
Future of the Stablecoin Ecosystem
Over the last year or two, the stablecoin ecosystem has been in decline. All stablecoins now have a market valuation of around $131 billion. Additionally, this represents around 11% of the whole cryptocurrency market, a figure that has been declining this year.
With a 62% share of the market and $82 billion USDT in circulation, Tether remains to be the leader in the field. While its rivals’ supply has decreased this year, its has been constantly growing.
Tether’s supply has increased by 24% since the start of 2023, giving it a dominating market lead.
In contrast, Circle is becoming smaller, while USDC, which has $30 billion in circulation, only controls 23% of the market.
Due to legal action taken against its issuer Paxos, Binance USD (BUSD) has also been losing value. BUSD only makes up 4.3% of the stablecoin market and has a $5.7 billion supply.
Benefits of the Stablecoin
Bail is often paid in cash or via a bail bondsman, who charges a fee in exchange for supplying the required monies. However, for low-income defendants who do not have access to huge quantities of money, this method can be costly and time-consuming.
Stablecoins backed by fiat provide a viable remedy for this issue. These digital currencies are a secure and trustworthy type of collateral since they are meant to maintain a steady value in relation to the US dollar. The proposed measure would speed up, reduce the cost, and broaden the accessibility of the bail posting procedure by enabling defendants to utilize stablecoins.
Despite these reservations, the usage of fiat-backed stablecoins for bail payments may represent a significant improvement for New York’s criminal justice system. The proposed measure may serve to lessen the cost of pretrial detention and enhance results for people involved in the criminal justice system by giving defendants a quicker, less expensive, and more convenient alternative to post bond.
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