Stablecoin Friendly Policies Can Help Make 2022 A Breakout Year For The Sector

Stablecoins increasingly are the form of cryptoassets most commonly used for transactional purposes, and as 2022 gets underway the importance of these cryptoassets will only increase.

From a business and marketplace point of view the upsides and opportunities linked to stablecoins are clear, and have been reinforced over the last several years. As should be self-evident by the moniker, the primary benefit of stablecoins is the reduced price volatility that often characterizes other cryptoassets.

A simple statement of fact, but one whose importance cannot be overstated. In order to achieve mainstream adoption and utilization as a medium of exchange rather than simply a speculative investment, users and consumers must have confidence in the value of whatever is being utilized for this purpose.

The appetite and interest in stablecoins has been demonstrated by the billions in transactions taking place using these assets, the regulatory focus highlighted by the President’s Working Group report on the matter, and the fact that several major payment processers now allow customers to send and receive payments denominated in stablecoins.

In other words, the functionality of these tools and market interest has been proven and established; the technology works and fills a need. Policy, or lack thereof, still remains a looming threat to broader adoption and utilization, and is an area that will need to be addressed as the sector continues to mature.

Obviously the conversations linked to cryptoasset regulation is beyond the scope of any singular article. Rather, the factors listed below are explicitly connected to stablecoins, and how commonsense policies can not only help accelerate adoption of stablecoins, and also create a regulatory environment that allows for further maturation and development of the space.

Let’s take a look at a few policy items that could – and hopefully will – accelerate the already rapid adoption of stablecoins.

Differentiate stablecoins. This point cannot be overstated; in order to further develop and expand the opportunities for stablecoin utilization, there needs to be a differentiation between stablecoins and other cryptoassets. While it is true that the cryptoasset space at large has become much busier during the last year or so – non-fungible tokens (NFTs), decentralized finance (DeFi), and the rise of central bank digital currencies (CBDCs) – the importance of this singular difference is paramount.

Even now as regulators seek to implement policies to monetize and capture the benefits connected to cryptoassets, stablecoins are routinely lumped in with more volatility counterparts. This not only misses the bigger point regarding the value case of stablecoins, but muddies the water around how to best integrate cryptoassets into financial markets.

Monetary competition is good. Recent comments and conversations have focused on, notably around the different CityCoin projects that have launched during the last several months, is that developing this array of options might not be the best use of resources. The thinking goes, why not instead invest these resources in developing other technologies or addressing other economic or societal issues versus introducing yet another cryptoasset? This line of thinking, as appealing as it might appear upon first review, misses the broader point.

Every economic sector, be it connected to technology or not, is improved by the introduction of competitive options for consumers, investors, and users alike. Many of the same proponents of more standardized and centralized cryptoasset options, namely CBDCs, should be encouraging new and innovative stablecoin options. Lessons learned in the private sector can – and have – been integrated into the development of newer and more mainstream cryptoasset options.

Competition is a good thing, and the best components of different tools will be integrated into whatever options do eventually achieve mainstream status.

Simpler reporting requirements. The tax, compliance, and reporting obligations that accompany cryptoassets are a burden that have been discussed in multiple outlets, and the issues that exist are nothing new. Building on the first point mentioned above, this is also an opportunity for policymakers to demonstrate that more sophisticated public commentary is also working its way into more nuanced regulation and rule-making. One of the best ways to communicate that policy is evolving alongside the sector would be to ease the compliance burden on the issuers and users of stablecoins.

Clearly there is always a role for well-informed and thought out regulation and rules, but the current reporting obligations seem more appropriate for cryptoassets with higher volatility than stablecoins. This subset of cryptoassets were developed, and have been explicitly designed, to function as a medium of exchange; how can this happen if potential tax obligations need to be recorded and reported for every transaction?

Understandably, government authorities wish to collect taxes when appropriate; that is not the problem in this context. The issue is when the rules that have been implemented seem to specifically and artificially undermine the primary use case of the instrument (stablecoins) in question.

Stablecoins have quickly rocketed from an interesting cryptoasset that might have struck some market participants as a boring alternative to bitcoin to an integral link in the adoption journey for many individuals and organizations. Despite this rapid growth and acceptance, however, work remains in order to fully realize the potential of these cryptoassets for transactional purposes.

As the calendar rolls forward into 2022, this is the perfect time to revisit, revise, and improve rules and policies around stablecoins. Serving a bridge and on-ramp for market actors at varying levels of expertise, stablecoins have a critical role to play; effective policy can go a long way to making this a reality.

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Source: Stablecoin Friendly Policies Can Help Make 2022 A Breakout Year For The Sector

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Bitcoin Can Collapse Completely, Says Agustín Carstens, Former Secretary of The Treasury

This article was translated from our Spanish edition using AI technologies. Errors may exist due to this process.

At the height of the cryptocurrency boom, the manager of the Bank for International Settlements (BIS) , Agustín Carstens , warned about the dangers of investing in them. The former finance secretary warned that Bitcoin is increasingly vulnerable and could completely collapse .

Yesterday, January 27, during the policy seminar of the Hoover Institution , the Mexican economist said that Bitcoin is a speculative asset, not money .

“Investors should be aware that Bitcoin can completely crash. Scarcity and crypto alone are not enough to guarantee exchange, “ explained Carstens , adding that Bitcoin is increasingly vulnerable .

The also former governor of Banco de México , affirms that central banks must control the issuance and management of digital money . Consider that they have the financial structure to guarantee the stability of the cryptocurrencies .

“For digital money to exist, the central bank must play a fundamental role, guaranteeing the stability of the value, ensuring the elasticity of the aggregate supply of said money and overseeing the general security of the system. Such a system must not fail and cannot tolerate serious errors , ”Carstens said

pic.twitter.com/18523AdPeg– Bitcoin (@Bitcoin) January 29, 2021

The BIS manager said that other private stablecoin projects, such as Facebook’s , are more credible than Bitcoin , but need to be regulated.

“In general, private stablecoins cannot serve as the foundation for a sound monetary system ,” he said. “But to remain credible, they must be strictly regulated and supervised. They must build on the foundations and confidence that the existing central banks give them and, therefore, be part of the existing financial system .

For now, many countries are targeting Central Bank digital currencies (CBDC) . In fact, 86% of major central banks are actively exploring CBDCs , according to a recent BIS survey.

Carstens indicated that national CBDCs would be used in various ways, such as the transmission of monetary policy and the management of interest rates. He explained that they should be complementary to the existing cash system , as completely replacing all bank accounts and cash with digital money is “undesirable” and “unrealistic .”

By: Entrepreneur en Español Entrepreneur Staff

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Sam Dolke

00:00 Intro 00:28 Halving and Support explained 03:34 Analysis of the previous Bull run 05:31 Analysis of this Bull run 06:42 How to counter Pullbacks 09:00 Conclusion 10:15 Outro Bitcoin is now worth more than 41k and it just keeps on climbing. But is this growth sustainable? Is a pullback, correction or crash in front of our door? Unfortunately timing the market is impossible but we can look at historical data and trends to get a general idea of the possibilities. In this video we’re going to do a technical analysis and look at previous trends.

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