New Crypto Regulation in the US | USDD Stablecoin Pivots

It's been about a month since the Luna crash that started this latest crypto winter, but new consequences of it are still emerging.

New Regulation around Crypto in the US

The Responsible Financial Innovation Act aims to regulate crypto space and keep investors and consumers safe in the process. Here are some of the main takeaways from this bill:

Stablecoins need to be 100% backed

That means for every $1 of a stablecoin issued, there needs to be at least $1 of assets sitting in the treasury of the organisation that is issuing the stablecoin. Organisations will also need to disclose exactly which assets they have in their treasury to back their stablecoin. 

No taxes on crypto transactions under $200

Currently, if I want to pay for something using Bitcoin, I have to pay tax on my crypto. This is a positive development for web3 in general, and will hopefully make it more viable to use cryptocurrency to pay for everyday things. 

Crypto Assets will be viewed as Commodities

This means they will come under the jurisdiction of the CFTC (Commodity Futures Trading Commission) rather than the SEC (Securities and Exchange Commission). This may end up being a good thing because the SEC has been inclined to regulate crypto as heavily as it can. 

USDD Changes Course

USDD WAS an algorithmic stablecoin started by Justin Sun. Just like Terra's failed stablecoin UST. It also offered a very high return to holders (currently 20 in order to encourage adoption of the coin... just like UST. We all know how badly it went for UST, and so after seeing this, Sun has pivoted. Now, USDD is an overcollateralised, crypto-backed stablecoin just like DAI. 

That means for every USDD coin issued, there will have to be more than $1 worth of cryptoassets stored in Tron's treasury. 

Total USDD supply stands at $703 million currently and as of the start of this week, USDD had a collateralisation ratio of 202.54%. That means for every $1 of USDD issued, there are $2.03 of other assets held in Tron's reserve to back that $1. Tron DAO has guaranteed that a minimum collateralisation ratio of 130% will be maintained at all times. Currently, Bitcoin, Tether (the fiat-backed stablecoin USDT) and Tron's TRX coin make up the majority of reserves (just over half) that are backing USDD.