Stablecoins: A Potential Boost for the US and Global Economies

According to Timothy Massad, the former Chairman of the Commodity Futures Trading Commission (CFTC), the US government should no longer overlook stablecoins, as they hold the potential to improve the domestic payment system. He suggests that taking steps to regulate these financial products could be beneficial, just as other countries like the United Kingdom have already done by implementing comprehensive regulations.

During a recent interview with CNBC, Timothy Massad emphasized that the American authorities are making an error by excluding stablecoins from their regulatory oversight. Instead, he believes they should be closely monitored and brought under the regulatory umbrella.

Massad sees stablecoins as potentially valuable in introducing healthy competition, provided that the government takes measures to address the risks associated with their use. In fact, he went on to describe stablecoins as a possible bridge that could connect the world of cryptocurrencies with the traditional financial system, creating a link between the crypto world and the real-world economy.

“My concern is we’re not addressing the risks. I think our regulators often take the view that, well, it’s better just to try to keep them out of the regulatory perimeter, but I don’t think that really works, and I think, you know, the competition from stablecoins could be useful, again, if we address the risks, and they are significant,” he stated.

Massad also claimed stablecoins should be treated as a payment mechanism, not an “investment vehicle.” He thinks they could provide America with certain benefits, such as improving its payment network:

“Most of us think of the payment system and say it seems to be fine: I’ve got credit cards, I’ve got mobile banking, what do we need anything else for? The truth is the US system is slower and more expensive than what other countries have developed all over the world.”

Massad also made the point that if the US were to establish clear regulations for stablecoins, other countries would likely follow suit in setting their own standards for these digital assets.

Furthermore, it is important to note that different regions within the US have already started considering potential legislation concerning stablecoins. For instance, lawmakers in New York proposed amendments in May, which, if enacted, could allow residents to pay bail bonds using stablecoins rather than traditional dollars. However, the specific assets that would be included in this potential bill were not specified.

Adding to the discussion, Jerome Powell, the Chairman of the Federal Reserve, recently expressed the view that stablecoins should be regarded as a form of money, indicating that the central bank should have some level of regulatory oversight over these digital currencies.

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