Key Insights:
- Acting Comptroller suggests setting standards for stablecoins.
- He intends to include representatives from the academics and government as well.
- Stablecoins hold a combined value of $186 billion in the crypto market.
Stablecoins have been around in the crypto space for as long as cryptocurrencies themselves have. Their utility beyond the purpose of exchanging tokens extends to real-world solutions, including payments to merchants accepting crypto.
But of late, governments worldwide have been looking at stablecoins as a problem more than a solution.
Stablecoins Need Regulation
This is the belief of many government representatives since most of them consider stablecoins as an emerging competition to fiat and the emergence of CBDCs.
However, since these cannot be shut down completely, stablecoins are being suggested to be subjected to regulations to limit their functions.
Talking on the topic of stablecoins, the Acting Comptroller of the Currency, Michael J. Hsu, stated that stablecoins lack shared standards and are not interoperable. And that to ensure that these cryptocurrencies are open and inclusive, standards must be applied.
The remarks came during his appearance at an event surrounding Artificial Intelligence (AI) hosted by the U.S. Department of Commerce, National Institute of Standards and Technology (NIST), FinRegLab, and the Stanford Institute for Human-Centered Artificial Intelligence.
Michael stated that technologies such as AI and stablecoins enable transactions in blockchain-based systems and that a standard-setting initiative similar to that undertaken by IETF and W3C must be established.
For this, Michael suggested that apart from representatives from the crypto and web3 firms, representatives from academics and government must also participate.
Further comparing stablecoins to the Internet, Michael stated,
“Well-designed standards can promote inclusive and responsible innovation. Take the internet, for instance. The technical foundations of the internet provide for an open, royalty-free network – something we take for granted today. Those foundations did not emerge on their own. They were developed by standard setting bodies like IETF (Internet Engineering Task Force) and W3C (World Wide Web Consortium), which had representatives with differing perspectives, a shared public interest ethos, and a strong leader committed to the vision of an open and inclusive internet.”
The Stablecoin Canvas
As stated before, stablecoins hold an important place within the crypto space, and they also represent a significant volume of money locked into them. All the stablecoins combined have a value of $186.7 billion, with trading volume in 24 hours exceeding $74 billion.
The biggest stablecoin Tether (USDT) alone commands a market cap of $83.1 billion, followed by USD Coin (USDC) at $49.5 billion.
The third biggest stablecoin, TerraUSD (UST), is also the biggest decentralized stablecoin collateralized by algorithm instead of USD or other cryptocurrencies.
Thus, the quickly rising stature of stablecoins might continue threatening government bodies and furthering them in their pursuit of establishing stringent regulations in place for them.
