The guide and the establishment of national innovation for the American stable law, which Congress has adopted this week, would regulate stablecoins and effectively transform them from a guarantee in a means of payment.
Although there is a need for regulation, because some retailers plan to issue their own stablecoins, the temporary cryptocurrency is hardly a genius decision.
The bill would present a huge risk for the financial system and consumers. And for what purpose? The United States already has a means of payment – it is called the dollar – and it works quite well.
For most of the history of the crypto, its use case, apart from paying goods and services in the underground economy, has not been clear. Tokenization has the potential to make payments more quickly and more effective.
The big problem has always been volatility: cryptocurrencies are not a stable reserve, and therefore not a useful means of payment. Stablecoins resolve this by trying to maintain an ankle in dollars.
They can do so in several ways, the most common of which is to use low -risk assets such as cash bills as support.
This will not produce a perfect dollar ankle. The exchange rate between the dollar and the attachment, the most popular part mainly supported by the invoices of the treasury, still fluctuates. It is more stable than an unspecified cryptocurrency, but not perfect.
Crypto coins issuers are very similar to the banks of the 1830s, which also issued their own currencies and have been regulated by states.
In a similar spirit, under the Act on Engineering, companies that emit less than $ 10 billion in parts would also be regulated by states while the American federal reserve would regulate larger issuers. The thing about the 1830s is that the system was very chaotic.
Constant monitoring was necessary, because any suspicion of devaluation of currency created banking executions and failures. States had different standards and several sub-regulated their local banks, creating a lack of confidence in the system.
At the time, consumers had no choice, because no universal fiduciary currency was widely available. Today, of course, Americans can simply use dollars.
The sellers do not have to worry that their value will fluctuate and that the holders do not have to worry that he collapses. The central bank will ensure that this is not the case. And despite the occasional conflict of inflation, the Fed has an excellent assessment.
The temporary stables also have risks for the financial system. Stablecoin issuers are already becoming a major source of demand for American treasury bills.
Tether bought more than $ 33 billion last year and now has more than Germany. If the market takes off, some banks believe that stabbing issuers could be a captive buyer for billions of dollars in treasury vouchers.
The government could see that the attractive additional demand because it would help keep low rates. But it also introduces systemic risk. If there is never a race on a large part, all these treasury bills should be sold quickly – causing a financial crisis or risking bailiff.
It is worth asking what could be the advantages of the engineering law. It would make payments more effective than the current system for using banks and credit and debit cards, which charge all non -trivial costs. But for Stablecoin issuers to increase a profit, they should also charge costs.
Currently, they earn most of their income from returns on their reserve assets. But to comply with effective regulations or simply inspire confidence, these assets must have a stable price (compared to the dollar) and be perfectly liquid.
In other words, they must be the type of asset that pays no return. The only way to earn money while paying for compliance costs would be to charge costs. Probably not much less than what credit card companies or banks are charging.
There are also specific concerns for the act of engineering itself: there is not enough regulatory control, so illicit use would always be possible. There are inadequate provisions for bankruptcy and for application.
And then there are concerns about conflicts of interest, in particular with the president, whose family issues his own documents.
But the biggest question is why the United States government wants to facilitate the use of stablecoins as a means of payment. Not only does this create a unnecessary risk, but it also undermines the government’s function as a dollar issuer.
The bank for international establishments (BIS) has a better idea: obtaining the advantages of cryptocurrency while minimizing risks and to better integrate blockchain technology into the central bank, simply the US dollar. © Bloomberg
