The Rise of Dollar-Pegged Stablecoins: A Boost for the USD
Waller suggested that DeFi has the potential to enhance the dominance of the dollar, and that the use of dollar-pegged stablecoins could reinforce the USD's global influence.USD-pegged stablecoins may enhance the supremacy of the US dollar, according to a Federal Reserve governor.
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Sujha Sundararajan Last updated: February 16, 2024 04:19 EST | 1 min read [Source: iQoncept / Adobe]
The US Fed Governor Christopher Waller, who previously voiced cryptos are “risky,” now throws a positive stance on dollar-pegged stablecoins.
Speaking at a conference in Nassau, Bahamas on Thursday, Waller said that decentralized finance (DeFi) could actually boost dollar dominance. He stressed that dollar-pegged stablecoins, such as Tether (USDT) and USD Coin (USDC), would strengthen the USD’s global reach.
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“About 99% of stablecoin market capitalization is linked to the U.S. dollar, meaning that crypto-assets are de-facto traded in USD.”
Any expansion of trading in the DeFi will “simply strengthen the dominant role of the dollar,” he further noted.
Usually, the rapid growth of cryptos could reduce the reliance on the US dollar. However, it is unlikely, as most DeFi trading uses USD-pegged cryptos, he noted.
Waller took charge on the central bank’s board in 2020 during Donald Trump’s presidential tenure. In February 2023, Waller warned crypto buyers that they could lose their entire investments.
He argued at the time that cryptos don’t have any intrinsic value and amount to nothing more than “risky” speculation. “To me, a crypto-asset is nothing more than a speculative asset, like a baseball card,” he noted.
Stablecoin Bill Coming Soon?
In the meantime, lawmakers in the US are pushing on stablecoin bill – a long-awaited win for cryptos. In a recent interview with Politico, Representative Maxine Waters said that a stablecoin legislation is “very, very close” to reaching an agreement. “We’re working on stablecoin; we’re getting very close,” Waters noted.
Waters has been negotiating on stablecoin legislation with House Financial Services Committee Chair Patrick McHenry for more than 20 months.
Additionally, crypto market heads such as Circle’s CEO Jeremy Allaire have voiced optimism on the US’s stablecoin law. Speaking in an interview with CNBC at World Economic Forum in Davos early this year, he said there is “momentum” and a “very good chance” of seeing a stablecoin legislation this year.
Furthermore, many jurisdictions have emerged in embracing cryptos to foster innovation, while maintaining a keen eye on regulatory safeguards. Singapore, for instance, has long been acknowledged as a welcoming environment for the crypto sector.
In August 2023, the Monetary Authority of Singapore (MAS) released a regulatory framework for stablecoins, applicable to single-currency stablecoins (SCS).
Q&A: What You Need to Know About Dollar-Pegged Stablecoins
Q: Are dollar-pegged stablecoins the same as cryptocurrencies like Bitcoin?
A: While both are digital assets, stablecoins like Tether (USDT) and USD Coin (USDC) are designed to maintain a stable value against the US dollar. Cryptocurrencies like Bitcoin, on the other hand, have a more volatile value and are not pegged to any specific currency.
Q: How do dollar-pegged stablecoins boost the dominance of the USD?
A: Dollar-pegged stablecoins, which are mostly traded in USD, contribute to the overall trading volume of the US dollar. As decentralized finance (DeFi) expands and more trading occurs using stablecoins, the dominant role of the dollar is solidified.
Q: What is the stablecoin bill and how does it impact the crypto market?
A: The stablecoin bill refers to legislation that is being proposed to regulate stablecoins in the US. This bill aims to provide regulatory clarity and safeguards for stablecoin transactions. If passed, it could bring more stability and confidence to the crypto market, opening up new opportunities for growth and innovation.
The Future of Dollar-Pegged Stablecoins
With the positive stance from the US Fed Governor and the impending stablecoin legislation, the future of dollar-pegged stablecoins looks promising. It is clear that these stablecoins play a crucial role in supporting the dominance of the USD and facilitating crypto trading.
As more jurisdictions embrace cryptos and establish regulatory frameworks, the crypto market will continue to evolve, providing opportunities for both investors and innovators. Investors should keep a close eye on the developments in stablecoin regulations while exploring potential investment strategies within the stablecoin ecosystem.
In conclusion, the rise of dollar-pegged stablecoins is not only revolutionizing the crypto market but also bolstering the global reach of the USD. 🚀 It’s an exciting time for both the traditional financial system and the crypto world, as they converge and shape the future of money.
References:
- 1. Ethereum Foundation Announces Devcon 7 Conference in Bangkok, Thailand, November 12-15, 2024
- 2. Solana-based Tsuka Coin Rockets 2500% Overnight, Crypto Whales Say Coin Is Next
- 3. Ethereum Bears Keep Pushing, But Decline Isn’t
- 4. Rep. French Hill Voices Optimism on Crypto Legislation Progress in 2024
- 5. US Lawmakers Very Close to Finalizing Stablecoin Deal, Says Maxine Waters
- 6. Follow Us on Google News
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