US Feds adds stablecoins to the list of risks of the potential risk to the financial system.
The CSO of Blockstream, Samson Mow, explains how stablecoins won’t last for long, and it will to ‘hyperbitcoinization.’
China’s push towards digital renminbi could act as the catalyst for further adoption of crypto.
In its recent report on financial stability, the Federal Reserve in the US said the economy was resilient. While rising debt is a reason for worry, there is still time before the destructive effects of rising corporate deficits will affect the economy.
Nevertheless, that does not mean that it is not prone to adversities. According to the report, low-interest rates and stablecoins pose a severe risk to stability in the future. The report concluded,
“The possibility for a stablecoin payment network to quickly achieve global scale introduces important challenges and risks related to financial stability, monetary policy, safeguards against money laundering and terrorist financing, and consumer and investor protection,”
Privately Issued Stablecoins and International Competition Leaves Little Choice
A blockchain-based currency provides for seamless, transparent, and efficient global payments. However, their application can be exploited for money laundering and other international crimes. Hence, the western governments of the world have been wary of them.
Stablecoins has become mainstream in 2019 after Facebook’s Libra announcement and China’s push towards Digital Renminbi. There are various other independent private efforts from the likes of Facebook, JP Morgan, and Walmart to issue USD backed stablecoins. Hence, the most natural path for the central banks will be issue to one of their own.
Leading crypto analyst and entrepreneur, Samson Mow talked about the current state of the stablecoins market with USDT leading the space. He said,
They’re a temporary thing. The main threat they face is from the national cryptocurrencies. How open will those national cryptocurrencies be? …But stablecoins will then have no reason to exist with a national cryptocurrency.
He also added that this would eventually lead to ‘hyperbitcoinization.’ The growth of stablecoins and national cryptocurrencies is leading the world towards an of bitcoin.
Do you agree with the analysts’ views? Please share your views with us.
The post How Blockchain Revolution is Driving Central Banks to Issue Crypto backed by FIAT appeared first on Coingape.