It’s not just the mighty US Dollar.
Here is our pick of the 3 most important Stablecoin news stories during the week.
There is a big debate in the Crypto world about should we just have one coin (Maximalist) or should we have many. Typically BTC people side on the Maximalist side and deride the others as “Shitcoiners”.
The argument is based on coincidence of needs. In barter times, I would sell my one goat for 10 ducks, except i didn’t want ducks, I wanted something else. Hence the usefulness of money and the less friction (exchange) from one type to another the better.
We kind of have the same thing in the modern Fiat world. The US Dollar is a reserve currency because it is held literally as a reserve by Central Banks. See below, 60% of the holdings in reserve by Central Banks is the US Dollar with a big fall to second place with the EUR at 20% and then Japanese Yen as 6% with others not really of material importance (side note: Gold is still held by Central banks but it is only 25% of total holdings, whilst Fiat is 75%).
A similar thing has been happening with Stablecoins. They are almost exclusively US Dollar and then dominated by one brand, Tether.
That is why the news this week that We GMO Internet Inc., the Tokyo-based Internet conglomerate, has won approval from the New York Department of Financial Services (DFS) to establish a limited purpose trust company and issue the world’s first regulated JPY-pegged and USD-pegged stablecoin.
In another signal that the US Banking system is preparing to defend itself and the US Dollars reserve status the Office of the Comptroller of the Currency (OCC) today published a letter clarifying national banks’ and federal savings associations’ authority to participate in independent node verification networks (INVN) and use stablecoins to conduct payment activities and other bank-permissible functions.
And finally, China and specifically the Central Bank (PBoC) is not slowing its advances either, Shenzhen, China’s technological hub, will start its second trial of the nation’s digital currency this week, giving away virtual gift packets to its citizens as the nation steps up its testing efforts in a bid to launch the world’s first sovereign digital currency.
So, besides BTC and all of the Crypto variants, we also have a large variety of different coins developing in the Stablecoin space. Will there be a dominant winner like today’s US Dollar or will all of this innovation bring us so many different types of value that when combined with near frictionless and low cost choice of many on-line exchanges we will decide that variety is the spice of life!
Alan Scott is an expert in the FX market and has been working in the domain of stablecoins for many years.
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