Additionally, Governor Christopher Waller of the Federal Reserve expressed his confidence in the private sector’s ability to create stablecoin solutions.
Summary
Governor Christopher Waller of the Federal Reserve believes that stablecoins can broaden the US dollar’s scope and enhance retail and cross-border payments. He advocates for a US regulatory framework that addresses stablecoin risks and allows both banks and non-banks to issue regulated stablecoins. Waller acknowledges the limitations of stablecoins but believes they can be beneficial for businesses and consumers. He believes the stablecoin market will either expand or contract based on its benefits.
According to Christopher Waller, the Governor of the Federal Reserve in the United States, stablecoins have the potential to broaden the scope of the US dollar. He also advocated for a regulatory framework that would enable banks to issue digital currencies pegged to the US dollar.
According to Waller, stablecoins are a “significant innovation for the crypto ecosystem with the potential to enhance retail and cross-border payments” during a conference in San Francisco on February 12.
In addition, he stated that the stablecoin market had reached maturity and would “benefit from a US regulatory and supervisory framework that directly, completely, and narrowly addresses stablecoin risks.” He also stated that both non-banks and banks should be able to issue stablecoins.
“This framework should permit the issuance of regulated stablecoins by both banks and non-banks, and it should take into account the impact of regulation on the payments landscape, including competing payment instruments…”
He also emphasized the importance of explicit regulations and expressed confidence in the private sector’s ability to develop stablecoin solutions for businesses and consumers.
“I am a firm believer in the capacity of the private sector to create solutions that are advantageous to both businesses and consumers, while the public sector is responsible for establishing an equitable set of regulations that market participants must adhere to,” he stated.
Waller acknowledged the current limitations of their use cases, which include the provision of a secure store of value within crypto trading, access to US currencies, particularly in high-inflation countries, cross-border payments, and retail payments.
“I am observing a significant number of new private sector entrants who are seeking to develop strategies to facilitate the use of stablecoins for retail payments,” he stated.
Nevertheless, there are obstacles, including the absence of a single regulatory structure in the United States, the fragmentation of state and international regulations, and the necessity for a balanced regulatory framework that promotes safety without impeding innovation. He also pointed out the dangers of “depegs” and failures.
In a speech at the Atlantic Council on February 6 of this month, Waller referred to stablecoins as “synthetic dollars” that were analogous to commercial bank money and that “open up other payment possibilities.” Additionally, he stated:
“I am in favor of it provided that they can do so in a manner that promotes competition, expands the payment system’s reach, reduces costs, and expedites the process.”
The Fed governor concluded by expressing his optimism that “the stablecoin market will either expand or contract based on the merits of its benefits to consumers and the broader economy.”
He said again that the private sector needs to keep coming up with new ideas that “meet a market need while building sustainable business models.” On the other hand, he said, the public sector needs to make sure that laws and rules are clear, targeted, and coordinated across states and countries “to help the private sector innovate on a global scale.”
Also Read: Brazil will ban individual stablecoin transactions to increase KYC:
The central bank of Brazil is becoming increasingly concerned about the potential for cryptocurrencies to divert attention from the real world. In an effort to encourage individuals to return to the national currency, the institution intends to prohibit self-custodial stablecoins…[Read More]
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