By Steve Forbes
The US government is going to declare war on a new, thriving class of cryptocurrencies called stablecoins.
Although bitcoin and similar cryptocurrencies dominate the headlines, stablecoins are what governments and central banks are really afraid of – and they are going to fight hard.
Unlike bitcoin and its “conspiracy”, the course of which resembles the “train of terror”, stablecoins are linked to real assets, such as the dollar or gold. This means that they can easily be a means of daily trading as well as long-term contracts. No sane person would take out a bitcoin mortgage, as he could end up owing 10 times the face value of his home.
The total value of this new class of cryptocurrencies jumped from $ 28 billion at the beginning of the year to $ 110 billion by July. Their use in trade is also growing rapidly. Not surprisingly, they do work as cash equivalents.
Therefore, stablecoins will reasonably be a deadly threat to existing payment processing systems, which are complex, cumbersome and costly. Thanks to blockchain technology, stablecoins cancel intermediaries. For example, debit card transactions cost merchants 2% -3% on commissions. With stablecoins, these commissions are eliminated.
Stablecoins will also greatly facilitate cross-border trade and remittances, while eliminating the usual commissions there as well.
The ultimate savings for consumers and businesses could literally be in the hundreds of billions – if not trillions – of dollars a year.
This development will free up huge funds to finance new businesses, while significantly increasing productivity-boosting investments in existing businesses. As a result, living standards will improve significantly.
The alleged purpose of US Secretary of the Treasury Janet Yellen’s meeting with the US President’s Financial Markets Working Group in July seems to be well-intentioned and correct. I quote Yellen: “The cooperation of regulators will allow us to assess the potential benefits of stablecoins and at the same time mitigate the risks they may pose to users, markets or the financial system.”
Some sensible arrangements are reasonable, especially one that ensures that a stablecoin issuer actually has the assets that offset its currency, just as it assures investors that a financial fund actually has the assets it claims to have.
But do not have illusions about the real agenda of the meeting. Regulators are realizing that stablecoin threatens not only existing payment systems, but also, and this is the most essential – the very monopoly that governments have had in issuing money. Governments will not allow this monopoly to be jeopardized.
Fireworks are starting now.
Source From: Forbes
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