A nightmare on Stable Street: Centralized stablecoins may be doomed
April 18, 2021. Summarized by summa-bot.
Compression ratio: 16.8%. 1 min read.
Government officials, regulators and central banks are targeting the stablecoin market, but decentralization is the answer.
In summary, the bill is intended to apply banking regulations to centralized stablecoin issuers, which could have a huge impact on stablecoins currently present on the market.
However, this impact could be mitigated by the transfer of liquidity into decentralized stablecoins, which can represent a competitive alternative and, at the same time, fall out of the scope of the central banks’ regulations. The main issue with decentralized stablecoins has a conceptual nature — the absence of an issuer automatically leads to the absence of stability, guarantees, legal responsibilities and governance.
The emergence of such solutions could have a significant impact on the current stablecoin industry, providing traders with a stable and transparent alternative to currently existing centralized stablecoins, which are on the verge of elimination under the pressure of regulators and central banks.