Cryptocurrency: Fed director shocks with statement on stablecoins

The rise of stablecoins, which are cryptocurrencies backed by stable assets like the dollar, could significantly change the landscape of the global financial system. As the debate over its regulation rages on, an influential voice has risen up. Federal Reserve President Christopher Waller said that under certain conditions, these digital assets could benefit the traditional financial system. His remarks, made at a conference at the Institute for Advanced Study on October 18, shed more light on how stablecoins have the potential to transform global payment methods. are.

Stablecoins: a new asset for international payments

In his speech, Christopher Waller emphasized that if properly regulated, stablecoins have the potential to eliminate the need for financial intermediaries and reduce costs associated with cross-border payments. . In fact, “stablecoins can reduce the need to rely on payment intermediaries and lower global transaction costs,” he said. These cryptocurrencies are often backed by fiat currencies such as the US dollar, offering the potential for smoother transactions and faster payment times, especially in regions with less developed banking infrastructure.

Waller also said that if properly regulated, stablecoins could become an important pillar of new trading platforms. He said: “Stablecoins can play a useful role in payments and serve as safe-haven assets if appropriate safeguards can be put in place to minimize panic risk and limit other dangers, such as their use in illegal activities. There is a possibility that it will.” The Fed governor has emphasized the importance of clear and strong regulations to allow stablecoins to flourish without compromising the stability of the financial system.

Stablecoins: May be carefully managed

However, despite these obvious advantages, Waller did not forget that the safety of stablecoins is never guaranteed. He expressed concern about its large-scale use without strict regulations to manage the risks involved. “The safety of stablecoins is not guaranteed,” he warned. It also points out the dangers associated with the absence of a regulatory framework. Without appropriate safeguards, these assets can be used for illegal purposes or create a liquidity crisis in the event of a large-scale loss of confidence, known as a “mountain run.”

Waller also echoed the concerns of several US lawmakers about increased competition between offshore stablecoins and US-regulated coins. According to a new report from Chainalysis, stablecoin trading on platforms not regulated by the US will reach 60% of global trading volume in 2024, and this figure will increase the number of transactions for these assets outside the US legal framework. reflects the trend towards adoption. Therefore, if this trend continues, stablecoins could escape regulatory control and become even more complex to manage. This situation could strengthen calls for more consistent and harmonized international regulation to ensure that these assets do not pose a threat to global financial stability.

As stablecoins continue to establish themselves as an alternative to traditional payments, their integration into the global financial system will depend largely on the ability of regulators to establish a secure framework. It will be. Christopher Waller and other influential figures acknowledge the potential, but the need for strict regulation remains at the heart of the debate. The future outlook therefore depends not only on legislators, but also on the ability of the financial sector to adapt to the new dynamics imposed by these cryptocurrencies. Stablecoins: opportunity or threat? Only effective regulation will solve this problem.

Luc Jose A.

Toulouse Scientific Diploma and Certification Consultant Alila Blockchain Exam Rejoined 2019 Coin Tribune. Examining the potential of blockchain in the field of economics, and the relationship between public sensibilities and information providers that will bring about a certain evolution of the social system for learning economics. The month is about understanding blockchain and its opportunities. Analyze the purpose of reality, decipher trends in Marche, analyze innovative technologies and perspectives, and analyze social revolution in Marche.

Disclaimer

The views, ideas and opinions expressed in this article are solely those of the author and should not be construed as investment advice. Please do your own research before making any investment decisions.