IMPORTANT POINTS:
- Stablecoins can make the dollar relevant again, but they need regulation.
- Companies like PayPal are embracing stablecoins, and legislation is advancing in the US Congress.
- Stablecoin adoption could be a $3 trillion opportunity over the next five years.
Stablecoins are emerging as a potential key application in the world of cryptocurrencies, presenting a unique opportunity to revive the relevance of the US dollar. But for this to happen, according to Brian Brooks of Valor Capital Group, proper regulation is required.
Current challenges
Brian Brooks, who was previously the CEO of Binance’s US arm and formerly the US comptroller of the currency, spoke about the ongoing issues with the Biden administration and his apparent opposition to stablecoins in an interview on CNBC.
Brooks noted that in countries with high inflation, citizens are demanding dollar-denominated products to keep their money safe. Also, in many nations where a dollar bank account cannot be obtained, stablecoins are presented as the best solution.
However, Brooks argued that, “If the US government created a framework that allows dollars to back stablecoins on a regulated basis, that demand would flourish. But as long as we allow governments to suppress stablecoins, we have this push-pull phenomenon, which creates the problem.”
Stablecoins are cryptocurrencies whose prices are tied to an underlying asset, typically a fiat currency. Bernstein this week dubbed them the “killer app” for crypto due to their ability to facilitate payments. Furthermore, they identified this as a nearly $3 trillion opportunity over the next five years.
PayPal and the advances in legislation
This week, payment giant PayPal launched its own dollar-backed stablecoin, a first for a major financial institution in the US. The development comes as the crypto market awaits a congressional vote on a key related bill. with stablecoins, which has advanced to the House along with three other crypto-related measures.
“Sueing stablecoin products is a way to make the dollar relevant again at a time when governments around the world are looking to decouple from the dollar,” Brooks said. Furthermore, he stressed that this is not only about crypto, but about the role that the United States plays in the global financial system.
