The US dollar accounts for over 100% of stablecoin value, and the collapse of UST has created a window of opportunity for policymakers.
In this clip from Bitcoin Magazine Pro, we will look at the USDT redemption method in further detail, as well as why there are worries about the stablecoin and the apparent hazards it poses to the bitcoin/cryptocurrency ecosystem.
Before delving deeper, it should be noted that the existence of bitcoin over a sufficiently extended duration eliminates the necessity for a “stablecoin,” which is essentially a blockchain-based IOU held by a counterparty.
The invention is a digital bearer asset that is totally stable on the protocol level as well as in terms of issuance and absolute supply and may be kept with no counterparty risk. Having said that, given the dollar’s current standing as the international reserve currency, the natural desire for dollars in the “crypto-economy” makes sense.
With today’s publication and attention on stablecoins, as well as the recent collapse of UST, policymakers have an attractive window of opportunity to give advice and clarity to stablecoin issuers, resulting in growing demand for monetizing US Treasury debt. After all, USD stablecoins account for roughly 100 percent of stablecoin value in the cryptocurrency ecosystem. Given the dollar’s current status as the international reserve currency, this makes basic sense.
The primary conclusion from the fast expansion of stablecoins over the last two years is that, despite the advent of a digital monetary bearer asset with a fixed supply (bitcoin), there is still demand for a bearer instrument in the form of dollars, although with trade-offs. Overall, a thriving stablecoin market will eventually lead to easier railways to bitcoin itself for individuals without access to the walled garden Western financial system, but without providing the certainties of bitcoin’s monetary policy or decentralization.