Stablecoins may be crypto’s killer app, but there needs to be regulation in place to allow them to flourish – which could benefit the U.S. dollar, according to Brian Brooks, a partner at Valor Capital Group.
Speaking to CNBC’s “Squawk Box” Friday, Brooks – who was previously the CEO of the U.S. arm of crypto exchange Binance and before that, the acting U.S. Comptroller of the Currency – took issue with the Biden administration’s seeming opposition to stablecoins and discussing stablecoin policy.
“Citizens in countries that have high inflation are really strongly demanding dollar-denominated products to keep their money safer after they’ve earned the money,” he said. “In many countries where you can’t get a dollar bank account, stablecoins are your best solution.”
“If only the U.S. government would create a framework that allows dollars to back stablecoins in a regulated way, that demand would flourish,” he continued. “That would be good for dollar adoption globally, but as long as we’re allowing governments to suppress stable coins, you have the sort of push-pull phenomenon, which is what creates the problem.”
Stablecoins are cryptocurrencies whose prices are pegged to an underlying asset, typically a fiat currency. Bernstein this week called them the “killer app” for crypto because of their ability to facilitate payments. The firm identified this as a nearly $3 trillion opportunity over the next five years.
This week, payments giant PayPal launched its own dollar-backed stablecoin – a first for a major U.S. financial institution. The move comes as the crypto market awaits a vote in Congress on a key stablecoin bill, which has just advanced to the House with three other crypto-related measures – another first for crypto in the legislation department.
“Demand for [stablecoin products are] a way for us to make the dollar relevant again at a time when governments around the world are looking to decouple from the dollar,” said Brooks. “That’s really a pretty important policy issue. It’s not about crypto, it’s about the role the United States plays in the financial system.”