Here is our pick of the 3 most important stablecoin stories during the week.
Are CBDC’s preparing to use regulators to out compete better alternatives?
CBDC implementations are still in the very early stages and yet there are signs that Regulators are blocking and stifling innovation.
The European Union’s Markets in Crypto-Assets legislation could effectively ban dollar-pegged stablecoins like USDT and USDC in 27 member states. This would have dire consequences for the entire EU crypto market.
EU Stablecoin Ban Would Cause “Extreme Volatility,” Lobbyists Warn – Crypto Briefing
Also in a controversial move by US Department of Treasury who announced sanctions against the crypto mixer Tornado Cash, saying the service had been used to launder over $7 billion worth of illicitly-gained crypto in just three years, a good chunk of that being funds stolen by hackers tied to sanctioned nations like North Korea. Those sanctions effectively put a litany of wallets associated with Tornado on a do-not-do-business-with list.
Crypto proponents have had problems with this move, mainly complaining that, instead of sanctioning any individuals, the restrictions targeted a decentralized smart contract and the code surrounding it. Now the Washington Post reported Wednesday that, based on data from crypto intelligence firm Dune Analytics, the company behind Tether has not blacklisted any of the sanctioned crypto accounts tied to Tornado Cash.
Tether Stablecoin Brushes Off U.S. Tornado Cash Sanctions (gizmodo.com)
Many Central Banks (some 109) are busy looking at CBDC’s but only a handful have actually launched and they have one thing in common, a notoriously weak sovereign Fiat currency and hence dollarized economies.
|Saint Kitts and Nevis||Launched||Retail|
|Antigua and Barbuda||Launched||Retail|
|Saint Vincent and the Grenadines||Launched||Retail|
Visualized: The State of Central Bank Digital Currencies (visualcapitalist.com)
So in summary, CBDC’s have only been launched in countries that Fiat has largely failed, you can understand why, it’s like a hail mary pass by Central Banks to cling on to some relevance in their economies. But will successful Fiat economies use regulators to gain an advantage or will they compete on a fair basis with existing and yet to be developed stablecoins?
Alan Scott is an expert in the FX market and has been working in the domain of stablecoins for many years.
We have a self imposed constraint of 3 news stories per week because we serve busy senior Fintech leaders who just want succinct and important information.
For context on stablecoins please read this introductory interview with Alan “How stablecoins will change our world” and read articles tagged stablecoin in our archives.