The potential of stablecoins in the cryptocurrency world is undeniable, but their growth and success depend on the implementation of proper regulations. Brian Brooks, a partner at Valor Capital Group, believes that such regulations could actually benefit the U.S. dollar.
In an interview with CNBC’s “Squawk Box” on Friday, Brooks, who has previously held influential positions in the crypto industry, including CEO of the U.S. arm of Binance and acting U.S. Comptroller of the Currency, expressed concern over the Biden administration’s reluctance to embrace stablecoins and discuss relevant policies.
Brooks highlighted the demand for dollar-backed products among citizens in economies plagued by high inflation. These individuals rely on dollar-denominated assets to protect their hard-earned money. However, in many countries, obtaining a dollar bank account is not feasible. This is where stablecoins provide a viable solution.
He suggested that the U.S. government should establish a regulatory framework that allows stablecoins to be backed by dollars. This would lead to a flourishing demand for stablecoins and ultimately contribute to the global adoption of the U.S. dollar. Currently, governments’ opposition to stablecoins creates a challenging push-pull situation.
Stablecoins are cryptocurrencies that are pegged to an underlying asset, typically a fiat currency. A recent report by Bernstein referred to them as the “killer app” for the crypto industry due to their ability to facilitate payments. The report projected a $3 trillion opportunity for stablecoins over the next five years.
In a significant development, payment giant PayPal recently launched its own dollar-backed stablecoin, marking a milestone for major U.S. financial institutions. Additionally, the crypto market eagerly awaits a Congressional vote on a crucial stablecoin bill, alongside three other crypto-related measures, which is unprecedented in terms of legislative attention.
Brooks emphasized the importance of fulfilling the demand for stablecoin products as a means to reinforce the relevance of the U.S. dollar. At a time when governments worldwide are considering breaking away from the dollar, this issue holds significant policy implications. Consequently, it extends beyond the realm of cryptocurrencies and speaks to the role played by the United States in the global financial system.
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