Will Regulatory oversight help or hinder?
Here is our pick of the 3 most important Stablecoin news stories during the week.
Last week we noted the amazing innovation in DeFi and the role stablecoins have to play within that ecosystem and wondered if the move by some Regulators and Politicians to get involved will help or hinder?
This article is interesting because it shows the dangers of unintended consequences. If Stablecoins are to be regulated like Banks then they will be able to hypothecate (make money based on capital reserves held at a Central Bank) rather than back them one for one. For all the arguments that the no coiners put up about Tether in particular not really backed one for one with cash but cash like instruments, it is surely dramatically safer than Fiat hypothecation.
And clearly stablecoins themselves have not stopped innovating. This stablecoin from Shapeshift combines the governance of a DAO with a stablecoin and their native ecosystem Crypto coin. Rewarding their users and giving them a role in future new coins which in turn are tied to new projects. Kinda like a VC for the masses!
Finally, we finish with a cautionary tale. If the new Crypto/stablecoin market stays in silo’s rather than enable interoperability it’s growth will naturally be curtailed. This point has been demonstrated a number of times in the past, the easier it is to trade from one coin to another the more positive investors feel about investing in the space.
So whilst the Crypto industry may not get everything it wants from Politicians and Regulators it should also help itself by ensuring interoperability so that these innovations can support each other rather than live or die each in their own world.
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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