Stablecoin regulation could fight de-Dollarization: Former US Comptroller of Currency
|- A former US Treasury mandarin urged Congress to regulate stablecoins
- Brian Brooks highlighted stablecoins’ role in providing an alternative to high inflation and currency devaluation.
- The Payment Stablecoins Act is unlikely to provide regulatory clarity on stablecoins after being withdrawn unexpectedly.
- Brooks cited the use of local currencies for trade settlement and urged Congress to regulate stablecoins to fight de-Dollarization.
Former US Comptroller of Currency, Brian Brooks, recently urged the Congress to regulate stablecoins, according to a report by news site Be In Crypto. Brooks believes that stablecoin regulation can help tackle the wave of de-Dollarization that has spread throughout Asian and Latin American countries.
While economies are implementing plans to settle their international trade in their local currencies, Brooks proposed to the Congress to tackle this through the use of stablecoins as “America’s soft power.”
Also read: Ripple XRP update: SEC to appeal XRP ruling, non-security status of altcoin likely at risk
De-Dollarization can be tackled by stablecoin regulation: Brian Brooks
Former Coinbase Chief Legal Officer Brian Brooks considers stablecoins a viable alternative for global citizens suffering from high inflation and devaluation of their local currencies. USD Tether (USDT) and USD Coin (USDC) could allow market participants to add to their savings, backed by the US Dollar without the involvement of local banks.
According to Brooks, this would increase the relevance of the US Dollar. Several doors have been shut for the US Dollar over the past year, as economies resort to the use of local currencies or propose the use of an alternative currency for settlement of trade, including: China, Russia, Brazil, India, Argentina, Saudi Arabia, Iran, and Thailand.
Moreover, the BRICS (Brazil, Russia, India, China, and South Africa) bloc has been working on the development of its digital currency for trade settlement, with the support of these developing economies.
Brooks cites these reasons as key for stablecoin regulation and urged Congress to take the requisite steps to tackle de-Dollarization on a global scale.
Bitcoin, altcoins, stablecoins FAQs
What is Bitcoin?
Bitcoin is the largest cryptocurrency by market capitalization, a virtual currency designed to serve as money. This form of payment cannot be controlled by any one person, group, or entity, which eliminates the need for third-party participation during financial transactions.
What are altcoins?
Altcoins are any cryptocurrency apart from Bitcoin, but some also regard Ethereum as a non-altcoin because it is from these two cryptocurrencies that forking happens. If this is true, then Litecoin is the first altcoin, forked from the Bitcoin protocol and, therefore, an “improved” version of it.
What are stablecoins?
Stablecoins are cryptocurrencies designed to have a stable price, with their value backed by a reserve of the asset it represents. To achieve this, the value of any one stablecoin is pegged to a commodity or financial instrument, such as the US Dollar (USD), with its supply regulated by an algorithm or demand. The main goal of stablecoins is to provide an on/off-ramp for investors willing to trade and invest in cryptocurrencies. Stablecoins also allow investors to store value since cryptocurrencies, in general, are subject to volatility.
What is Bitcoin Dominance?
Bitcoin dominance is the ratio of Bitcoin's market capitalization to the total market capitalization of all cryptocurrencies combined. It provides a clear picture of Bitcoin’s interest among investors. A high BTC dominance typically happens before and during a bull run, in which investors resort to investing in relatively stable and high market capitalization cryptocurrency like Bitcoin. A drop in BTC dominance usually means that investors are moving their capital and/or profits to altcoins in a quest for higher returns, which usually triggers an explosion of altcoin rallies.
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