How 2020 has turned out so far, it is easy to see the effect that stablecoins have had on the blockchain market, and current circulations and new projects are still growing as we speak. In many ways, stablecoins have been able to do what Bitcoin has not, which is essential to gain more layman trust due to its relative stability. Digital payments, with instant transactions and verifiable ledgers have never been the problem in the blockchain movement, but rather the hoard of sharks and traders who look to capitalize on the meek and knowledge deprived in order to fatten their pockets more than they already are.
This is a catalytic reason as to why central governments shouldn’t just approve protocols for more stablecoins and digital currency (we’re looking at you OCC & SEC), but also jump into the foray themselves. It is the job of the central government bodies to protect its citizens, as it does from everything ranging from food & drug producers, to defensive contracts. Protecting its citizens from market volatility, online predators and unethical organizations in the blockchain space should therefore also be a responsibility burdened by the government. This isn’t an argument between regulations, taxes, policies or implantation — but rather an argument about what a central government’s main role is, protecting its citizens.
Sure, there are financial and political reasons for governments to jump into stablecoins. It is inevitable that the world is moving towards digital payments of some sort, and fighting it would be like fighting the internet or electricity when those innovations populated certain parts of the world sooner than others. This centrally backed movement towards creating stablecoins is already being seen around certain parts of the world such as the UK, with the Treasury assigned to provide a stablecoin framework. New Zealand as well, is experimenting with the idea — although not officially backed by a governing body. Once again, the incentives at this point probably are not properly aligned — as it is much more incentivizing for private financial institutions who have more upside than it is for central governing bodies to change hundreds of years of financial and fiscal practices.
While challenges such as the technical adoption of blockchain technology, or how digital finance will change consumer spending and saving behavior do exist, these are challenges that can and should be solved by the most powerful, capital entrenched organizations of the world — governing parties. The latter challenge, a change in consumer behavior is potentially the biggest risk of all. Research has demonstrated that when we are physically holding fiat money, humans tend to be more risk averse and cautious with their spending as opposed to when it’s just a number on a screen. This is further backed up by casinos, who lower your mental and emotional attachment to your money by substituting it for a coin with a number on it.
But this is precisely the reason why governing bodies should get in the stablecoin game, and get in early. This shouldn’t prevent private enterprises from operating independently, as collateral can be broadened to include other things besides the USD. Perhaps as this vision unfolds, more organizations like Stably — who provide stablecoins-as-a-service, will see broader adoption amongst not just enterprises, but federal governmental agencies and smaller local municipalities as well.
Stably is a US-based FinTech providing fiat onramp and stablecoin infrastructure to digital wallets, decentralized applications, Web3 projects, and blockchain development organizations. Our mission is to power the next billion Web3 users with a superior fiat <> crypto onramp to all popular and emerging blockchain ecosystems.
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