Stablecoins have been regarded as something that could disrupt the financial stability by regulators around the world. The oldest stablecoin, Tether’s tryst with the regulators, has not been smooth.
“One of the biggest learnings over the last five years trying to build a cross-border product with crypto is that the largest component is not technology.”
He went on to add,
“The largest component is convincing these highly regulated to do something with you, to open an account with you, to get comfortable with utilizing crypto. These problems are a lot harder to fix.”
Anchored by either fiat or gold, stablecoins have continued to occupy a unique place in the crypto industry over the years. But despite that, according to Vogel, the fiat/gold pegged tokens have continued to pose a challenge. He said,
“We certainly have these new stablecoins where the aim is to make them incredibly transparent where there is a lot of auditing going on. But for a long time, this was a very opaque thing.”
Stablcoins are currently not regulated. While the newer rollouts have tried to bring in more transparency, but problems still persist. Due to this, the lawmakers have continued to raise concerns. 2019 saw many regulators around the globe publish research papers on the same.
One of the most interesting was G7/BIS’s October report on stablecoins which stated that if the industry is not effectively regulated and supervised, crypto-assets, including stablecoins, “can pose significant risks to financial integrity” and may create new opportunities for money laundering, terrorist financing, and other illicit financing activities.