The regulation that helped the US get behind crypto, stablecoins

00:00 Speaker A

Dollarization is not new. People have stored physical dollars under mattresses and conducted business in dollars for generations, but physical cash is difficult to acquire, transport and use online. Foreign dollar bank accounts require access to banks. Stable coins remove both barriers.

00:19 Speaker A

This is dollarization at internet speed. The United States sees stronger dollar influence. The country on the other side may see capital flight with a better user interface. That's why this cannot be reduced to a victory lap about innovation.

00:35 Speaker A

A technology can empower individuals and destabilize institutions at the same time. In fact, that's usually what disruptive technology does.

00:46 Speaker A

There's also a problem for the crypto purist celebrating stable coin adoption as proof that decentralized finance won. Most major stable coins are not decentralized money. They are privately issued claims on reserves managed by centralized companies.

01:04 Speaker A

The token may travel on a public blockchain, but the issuer can freeze addresses, block transfers, and comply with lawful government orders.

01:14 Speaker A

That is not a hidden defect. Under the emergent regulatory system, it is part of the design. Washington may not need to operate a retail central bank digital currency if regulated private issuers distribute digital dollars while enforcing American rules. Stable coins can provide much of the reach of a digital dollar without putting the Federal Reserve in the business of managing everyone's wallet.