Making Markets

Austin Campbell: A Primer on Stablecoins - [Web3 Breakdowns, Replay]

Sep 15, 2023

In this podcast, Austin Campbell, an expert on stablecoins with a background in traditional finance, breaks down the nuts and bolts of how Stablecoins work. He discusses the lessons crypto should learn from traditional finance, the current US regulatory crackdown, and the challenges faced by regulators in the crypto space. They also explore the recent regulatory issues surrounding Paxos and their stablecoin BUSD, and predict the future of crypto including the transformation of markets and the deployment of identity on the blockchain.

01:02:01

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Episode guests

Austin Campbell

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Quick takeaways

Stablecoins bridge the gap between traditional finance and the digital world, serving as a means of payment and a store of value for transactions.

Building a functional stablecoin requires a reserve fund, a smart contract system, and a guarantee of timely redemption to maintain stability.

Regulators face challenges in understanding and regulating stablecoins, highlighting the need for global collaboration and balancing innovation with consumer protection.

Deep dives

The Importance of Stablecoins in the Digital World

Stablecoins serve as a means of payment and a store of value for transactions. They bridge the gap between the traditional finance system and the digital world. The conversation with Austin Campbell helps break down the nuts and bolts of how stablecoins work, emphasizing the need for a reserve fund, a smart contract system, and a guarantee of timely redemption to maintain stability. Additionally, there is a discussion about the lessons crypto should learn from traditional finance and the impact of regulatory crackdown on the ecosystem.

Introduction

2min

Learning from the Past and the Multidisciplinary Nature of Crypto

2min

Building a Stablecoin: Core Components and Challenges

20min

The Challenges Faced by Regulators in the Crypto Space

10min

SEC's Proposed Rule on Qualified Custodians and Implications for Non-Crypto Assets

3min

Regulatory Concerns Surrounding Paxos' Stablecoin BUSD

21min

The Transformation of Markets and the Future of Crypto

4min

Today we are revisiting my conversation with Austin Campbell. After my interview with Mike Dudas, I had asked, who is the smartest person I can talk to about Stablecoins? He instantly responded, you need to speak with Austin, and as you'll hear, I think he's right.

Austin spent 15 years in traditional finance before managing $22bn of Stablecoin reserves for Paxos. Today, he's an Adjunct professor at Columbia Business School and the managing partner at Zero Knowledge Consulting. In this conversation, Austin helps me break down the nuts and bolts of how Stablecoins work. We also discussed the lessons crypto should learn from the traditional finance world and how the current US regulatory crackdown will shape the ecosystem going forward. Please enjoy this Stablecoin primer with Austin Campbell.

For the full show notes, transcript, and links to the best content to learn more, check out the episode page here

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Show Notes

[00:03:21] - [First question] - What can be learned from TradFi and applied to crypto

[00:05:13] - The basics of Stablecoins and why they are important

[00:07:39] - The logistics and mechanics of Stablecoins from the ground up

[00:17:14] - Time-delay and infrastructure problems when trading with Stablecoins

[00:21:18] - Liquidity, time sensitivity, and credit risk for issuers and buyers of Stablecoins

[00:24:59] - The roles, challenges, and faults of regulators in the space

[00:33:04] - The extent to which he sees regulators favored versus fouled by crypto natives

[00:34:50] - The SEC’s imposition that qualified custodians are needed to exchange crypto assets

[00:37:53] - His takes on news regarding Paxos and the BUSD

[00:43:01] - Concerns regarding Binance and its Stablecoin consolidations

[00:46:30] - Aspects of global Stablecoin regulation he’s optimistic about

[00:49:01] - Why the US may not be a promised land for crypto

[00:50:21] - The positives and potential impact of Stablecoins broadly, despite the pushback

[00:54:03] - The possibility of traditional assets using crypto rails

[01:00:04] - What he’s most excited to see built over the next six months and six years

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Making Markets

Austin Campbell: A Primer on Stablecoins - [Web3 Breakdowns, Replay]

Episode guests

Podcast summary created with Snipd AI

Quick takeaways

Deep dives

The Importance of Stablecoins in the Digital World

Challenges in Building Functional Stablecoins

The Role of Regulation in the Stablecoin Space

Challenges Faced by Regulators

The Need for Collaboration and Education

Remember Everything You Learn from Podcasts