3iQ Research Director The stability of LianGuaiyLianGuail stablecoin may trigger competition and force regulatory agencies to take action.

LianGuaiyLianGuail stablecoin's stability may spur competition and compel regulatory agencies to act.

Author: André Beganski, Decrypt; Translation: Song Xue, LianGuai

LianGuai recently launched LianGuai USD to enter the stablecoin market, which has caused different reactions among cryptocurrency enthusiasts: some see it as a shaping event for the industry, while others describe it as unremarkable.

Regardless, LianGuai’s decision to enter the $125 billion stablecoin market has caused a sensation. LianGuai Trust, as the issuer of its PYUSD token, represents another powerful force from the traditional financial sector that is advancing plans for the widespread use of blockchain technology.

Mark Connors, Director of Research at 3iQ, pointed out that LianGuai has 431 million users worldwide, and the impact of LianGuai’s stablecoin launch could rival BlackRock’s attempt at a spot Bitcoin ETF. He compared LianGuai’s influence among vendors to the statement by Larry Fink, CEO of BlackRock, who leads one of the world’s largest asset management companies, in support of Bitcoin.

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He said, “This is as important news as Larry Fink validating Bitcoin, because it will have an immediate impact on the payment system.” “They are doing this because they want to participate in the next phase of finance.”

Varun Kumar, Founder and CEO of Hashflow, expressed a similar view, stating that LianGuai’s stablecoin will increase the mainstream use of cryptocurrencies, moving away from speculation, and may encourage other companies to enter the digital asset space.

He said, “This is a net positive for the cryptocurrency industry and another step towards mass adoption.” “I expect to see more large companies taking a similar path in the near future.”

Stablecoins are cryptographic tokens typically pegged to real-world assets (such as the US dollar) and designed to maintain a stable price. These tokens are important tools in the cryptocurrency market, accounting for the majority of industry trading volume. For example, in the past 24 hours alone, the trading volume of Bitcoin with stablecoins has exceeded $3 billion, while the trading volume with the US dollar is only $400 million.

Over time, LianGuai customers in the United States will be able to use PYUSD stablecoin. Users of the payment app Venmo will soon be able to use stablecoins as well. Ultimately, LianGuai plans to enable people to hold PYUSD in third-party digital wallets such as MetaMask.

Antonio Juliano, CEO of dYdX, stated that offering people more stablecoin options from trusted companies is overall a good thing. While Circle (USDC) and Tether (USDT) are the leaders in the stablecoin space today, he pointed out that competition will drive better products.

“More competition and choices between reputable stablecoins are good for the industry,” he said. “We are still strong supporters of USDC, but it is great for consumers to have more options for stablecoins.” Circle’s USDC currently has a market value of over $26 billion, while Tether’s USDT leads by a significant margin with a market value of $83 billion.

After the collapse of Terra’s $40 billion UST more than a year ago, LianGuaiyLianGuail created a stablecoin. It is an algorithmic stablecoin that pegs its price to the US dollar through trading incentives, rather than being backed by assets such as US Treasury bonds. However, when it collapsed, everything fell apart.

The cryptocurrency crisis has prompted lawmakers to take action, albeit slowly. With a recently proposed bill on stablecoin regulation gaining approval on Capitol Hill, Patrick McHenry, chairman of the House Financial Services Committee, said it is time to get the job done.

In a written statement, he said: “Congress needs to enact legislation to provide comprehensive regulation of digital assets, especially stablecoins, which is more important now than ever before.” “We are currently at a crossroads of keeping America at the forefront of digital asset innovation.”

However, a group of commentators on Crypto Twitter were not enthusiastic about LianGuaiyLianGuail’s statement. Cryptocurrency analyst Adam Cochran stated that there is a lack of action from LianGuaiyLianGuail on Twitter, as PYUSD is reportedly limited to LianGuaiyLianGuail’s services and Venmo. This is disappointing.

According to the LianGuaiyLianGuail website, LianGuaiyLianGuail customers who purchase PYUSD will be able to “send it to an Ethereum wallet address in just a few steps” and may need to pay network fees.

Sasha Hodder, founder and managing partner of Hodder Law Firm, expressed concerns about the review of PYUSD on Twitter. Due to LianGuaiyLianGuail’s ability to reverse transactions and other features, she compared stablecoins to Central Bank Digital Currencies (CBDC).

CBDCs are similar to stablecoins in that they are both pegged to the price of sovereign currencies. However, stablecoins are issued by private companies on public networks, rather than being maintained by their respective governments or central banks as CBDCs typically are.

Hodder stated that PYUSD has “all the review capabilities of CBDCs,” but at the same time, it is “launched by large tech companies rather than governments.”

These concerns are not unfounded. Both Circle and Tether, the two centralized stablecoin issuers, have the ability and willingness to freeze accounts and invalidate stablecoins under pressure from government entities.

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