This episode of What’s Ahead delves into the reasons that top U.S. financial market and bank regulators are dreading the rise of a new type of cryptocurrency: stablecoins.
Unlike Bitcoin and its brethren that fluctuate like yo-yos, stablecoins are tied to a specific asset, such as the dollar or gold, giving them a stability ideal for conducting commercial transactions. Done right, they are a substitute for cash.
With blockchain, stablecoins cut out the layers involved in today’s complex and expensive payment system. For insistence, merchants would no longer have to take credit cards with their 2% to 3% fees.
More ominous for politicians and central banks, stablecoins could quickly become alternative currencies to those issued by governments.
Some commonsense regulation is needed, such as insuring that an issuer actually has the assets to back up its coins.
But make no mistake—the Janet Yellens of the world are out for blood.