Stablecoins have started to crawl, when will they walk?
Here is our pick of the 3 most important Stablecoin news stories during the week.
As reported here last month, the Office of the Comptroller of the Currency (OCC) said that banks can utilize stablecoins in transactions, among other banking activities. To get a bit more granular, in an interpretive letter, the OCC said that regulated financial institutions (FIs) can participate in independent node verification networks (INVN for short – namely, a blockchain network).
That regulatory move might light a fire under banks’ stablecoin strategies, however there are broadly two types of stablecoin. Private coins such as Tether’s USDT and Circles USDC and then Central Banks of which the People’s Bank of China (PBoC) is the most advanced.
In this race between Public and Private, the big issue for Central Banks in the West (The Fed, ECB, BoE ect) who want to launch CBDC’s, is that they may be stuck in the slow lane, because first, they will need to get enabling legislation as this excellent IMF blog points out.
We reported on an example of how this process could well take 3 to 4 years Last week, when the UK HMRC (Government Treasury) released a consultation paper with a submission date of mid August. This week an excellent background document on this consultation was put together by PWC.
It seems the Australian Bank Macquarie has figured out what this means. Bitcoin and other Crypto currencies have a window in which to become mainstream before a really big and powerful competitor can defend their monopoly position.
So in summary, if we are to have a world that is diverse and full of competition between private, public, Fiat, Crypto and hybrid coins, then the private and Crypto guys had better get moving from their current crawl and build their ecosystems and network effects soon, before the really big guys get their act together!
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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