Among the top 10 cryptocurrencies, two stablecoin projects called USDC and USDT have been able to retain their high rankings throughout the year. The year-to-date price movement suggests that the total market cap of the stablecoin projects on the cryptocurrency market has increased by five times. There are investors like Kevin O’Leary who claimed that they want to diversify their portfolio with selective stablecoin projects.
However, the biggest change towards stablecoin has been expressed by Federal Reserve Governor Christopher J. Waller. In a recent media statement, Waller claimed that the presence of stablecoins makes the need for the CBDC project redundant. It is worth noting that Waller has remained an outspoken cryptocurrency critic for the most part.
Issuance of Digital Dollar
The centralized financial regulators of several countries have shared plans to issue a Central Bank Digital Currency or CBDC. However, the criticism of the Federal Reserve’s Governor is a new development in this matter. Waller has made his case against the issuance of a digital dollar or CBDC due to the presence of stablecoins in the cryptocurrency market.
Despite his uncharacteristic acknowledgment of stablecoins, he proceeded to point out three big risk factors associated with these tokens. Waller claimed that the unreliable issuers of a stablecoin can attach the value of the token to an unstable financial instrument that might go bust in the future. Such a development will afford losses to a massive circle of investors that exceeds the initial investors and deposit holders.
The stance of the US government has started to change towards cryptocurrencies rapidly. The Federal Deposit Insurance Corporation has announced that it is researching the ways to integrate crypto assets. Meanwhile, Federal Reserve Governor Waller has pointed out that stablecoins have shaky scalability issues. He claimed that due to the inability of payment systems integration, the stablecoin holders can’t find secure liquidity avenues. Waller has also pointed out that the decentralized nature of stablecoins has been recognized by both Congress and Federal Reserve experts. He further added that stablecoin technology is alien to the banking sector. However, it has a great potential for becoming a commercial success by inviting interest from Silicon Valley. Therefore, it is worth exploring more options with stablecoins that can be used to improve the centralized banking system.
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