By Haseeb Qureshi, 23 Dec 2020 on Medium
The crypto industry has been in a tizzy lately over a the STABLE Act, a US bill that would require stablecoin issuers to obtain banking charters… i.e. stablecoin regulation is coming.
If adopted, the STABLE Act would force stablecoin reserves to be regulated like bank deposits. This would be a massive setback to stablecoins, which serve as the de facto money of the crypto ecosystem today.
The industry response was swift and furious. All at once, exchanges, entrepreneurs, and investors denounced the bill and its consequences.
For now we can rest easy, as the STABLE Act itself is unlikely to pass. But just recently, the Presidential Working Group made a statement suggesting that all stablecoin holders should be KYC’d.
This statement does not have the force of law. But it suggests the zeitgeist has changed.
Stablecoins have grown dramatically in the last couple of years, largely unperturbed by regulation. Is this sustainable? Is the STABLE Act a harbinger of what’s to come? And what will happen to Tether, or to decentralized stablecoins?
Here’s what I think: In the long term, regulation will be a one-way march. Centralized stablecoins will gradually become more and more restricted, pushing the crypto economy toward decentralized stablecoins.
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