SEC commissioner warns of high risks of dollar-backed stablecoins for investors. Intermediaries have no legal obligation to redeem stablecoins.
Caroline Crenshaw, a commissioner at the U.S. Securities and Exchange Commission (SEC), has stated that the regulatory body has severely underestimated the risks of stablecoins for retail investors. She emphasized that intermediaries have no legal obligation to redeem stablecoins and holders of these digital currencies have no contractual rights against the issuer if the intermediaries refuse redemption. Crenshaw also pointed out that retail investors do not have access to the reserves of stablecoin issuers and are forced to accept the market price determined by the intermediaries.
