Fed Chairman Powell recently dropped a bombshell to cool down the hot Crypto Assets market. The long-awaited stablecoin regulatory framework has finally transformed from verbal commitments into actual action, and this move will have a profound impact on market participants.

As ordinary investors, we may think this has nothing to do with us. However, the reality is quite the opposite. The stablecoins in your wallet, such as USDT and USDC, may soon face a new operating model.

On the surface, stablecoins claim to be equivalent to the US dollar, seemingly safer than stocks and more flexible than cash. However, the reality is not quite so. Many stablecoin issuers operate in a manner similar to 'shadow banking':

Investors generally believe that stablecoins like USDT are backed by real assets, but they may be mixed with U.S. Treasury bonds, commercial paper, and even high-risk bonds. The painful lesson from last year's Terra collapse, which led to the evaporation of $40 billion, is still fresh in memory. Once stablecoins 'decouple,' the market will face a huge impact.

What worries U.S. authorities even more is that 90% of dollar stablecoin transactions occur overseas. This means that dollars created on Wall Street are being converted into 'digital dollars' in the cryptocurrency sphere, circulating globally while evading U.S. financial regulation. This uncontrolled phenomenon of 'dollar outflow' ultimately prompted the Fed to take action.

The core of the new regulatory framework can be summarized as 'manage' and 'block' in two aspects. It delineates clear boundaries for stablecoin:

First, law enforcement powers are no longer passed around. Previously, cryptocurrency was a difficult issue that the SEC (Securities and Exchange Commission) and the CFTC (Commodity Futures Trading Commission) kept shifting between each other. Now, under the leadership of the Treasury, the responsibilities of all parties have been clearly delineated.

This series of measures marks a new phase in stablecoin regulation and will have a profound impact on the entire Crypto Assets ecosystem. Investors need to closely monitor policy trends and adjust their investment strategies accordingly.