Cato Podcast Stablecoins and the Fight for a Level Playing Field
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Jul 15, 2025 Jennifer Schulp, Director of Financial Regulation Studies at the Cato Institute, dives into the dynamic world of stablecoins, discussing their role in the cryptocurrency ecosystem. She explains how stablecoins maintain value stability and why reserve-backed models are crucial. Legislation such as the Stable Act and Genius Act are examined for their impact on fair competition between banks and non-banks. Jennifer also addresses the tensions between regulatory scrutiny and financial privacy, shedding light on the future of digital currencies.
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Stablecoins Bridge Crypto and Fiat
- Stablecoins provide a digital dollar on the blockchain, maintaining a stable value usually pegged to fiat currencies like the U.S. dollar.
- This stability is crucial to using crypto as currency, unlike volatile coins like Bitcoin.
Reserve Backing Stabilizes Value
- Most stablecoins are reserve-backed, holding high-quality assets like U.S. Treasuries equal to tokens in circulation.
- This backing is essential for maintaining the one-to-one dollar value promise to users.
Stablecoin Bills Cover Broad Regulation
- Key stablecoin bills focus on reserve requirements and issuer regulations, resembling some banking rules without categorizing issuers as banks.
- They address issuer financial stability, anti-money laundering, state vs. federal regulation, and foreign-issued stablecoins.