The Need to Regulate Stable Coins

I’m typically not one to call for regulation — particularly in the #crypto space. However, I’m increasingly thinking that “stable” coins need some type of oversight as they very much may prove UNstable in times of financial duress.

The crypto ecosystem is an exciting place to be, whether one just holds BTC or ETH, or one is active in DeFi or NFTs. The innovation going on at the moment across the space has never been seen before in any sector by any set of actors. Period. And stable coins are an important “lubricant”, contributing to the success of the sector.

My concern is that it would quite damaging to the cryptosphere if we had a stable coin failure.

In the last week alone, both the Fed chairman Powell and the SEC head Gensler stated quite clearly that neither had any intention of banning bitcoin / cryptocurrency. This is superb news (and one reason why we’re approaching BTC ATH again).

Last summer the Fed’s vice chair stated “we do not need to fear stablecoins”. Whereas this comment could just have been in support of a future US dollar stable coin — and indeed a CBDC does have a real world risk and would come with US government backing — can private stable coins be considered to provide similar functionality?