The discussion highlights three significant downsides to the use of stablecoins in the current financial landscape. Firstly, the absence of robust global regulation leads to the availability of unstable or poorly managed stablecoins that can harm financially uninformed users, as evidenced by incidents like Terraform Labs. Secondly, while public blockchains promote accessibility and financial independence, they may simultaneously challenge established rule of law, presenting both opportunities and risks depending on the regulatory environment of different regions. Finally, users of these systems face new risks, particularly due to the public nature of blockchains, which can enable tracking and tracing of transactions. Additionally, stablecoins are not entirely devoid of regulation; their issuers possess the power to freeze and seize funds, creating a vulnerability that rivals traditional financial systems.
Pretty much since the moment that cryptocurrencies came into existence, there's been a chorus of skeptics who argue that they solve no real world use cases, except for gambling and speculation. For a while, there was a lot of hype about things like Web3 or DeFi, but for the most part, these still remain in the realm of pure speculation and gambling. And so, the ultimate use case for crypto remains elusive. Our guest on this episode argues otherwise. He thinks that stablecoins, such as Circle or Paxos, which are backed by actual dollar instruments in regulated institutions running on public blockchains (like Ethereum or Solana) are solving a genuine problem in transmitting money, beyond just speculating on other cryptocurrencies. Austin Campbell is an adjunct professor at Columbia Business School and the founder of Zero Knowledge Consulting. He also comes with a long resume at both crypto and legacy financial institutions. He explains why stablecoins are having a moment and explains the problems they currently solve (particularly internationally) and why legacy payments infrastructure is unlikely to serve the same needs.
Read more:
The Case for Stablecoins Being the New Shadow Banks
How Stablecoins Became a Powerful Force in Crypto
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