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Banking Crisis, Good for Stablecoins[Opinion]| coindesk JAPAN | Coindesk Japan

Who would have thought that the US government would bail out stablecoins?

By sheer coincidence, the U.S. Treasury Department, Federal Reserve Board (FRB), and Federal Deposit Insurance Corporation (FDIC) have announced plans to fully protect the deposits of two failed banks, resulting in the stablecoin USD Coin ( It also promised to protect at least 8% of USDC collateral. Circle, which owns USDC, said it deposited about a quarter of USDC’s reserves in six or so banks. What a coincidence!

various stablecoins

The bailout was a boon to circles struggling to sort things out after the USDC lost its US dollar peg in the aftermath of the Silicon Valley Bank collapse. Circle CEO Jeremy Allaire recently commented on the emergency measures the company has taken to diversify its cash holdings and make future stablecoins a virtual “electronic government bond.” He spoke about his efforts over the past two years.

If the idea of ??a crypto-based tool like a stablecoin acting as a “surrogate” for a central bank digital currency (CBDC) puzzles you, you are not alone.

Stablecoins may serve as a bridge between crypto assets and the real economy, but they should maintain the characteristics that make crypto assets crypto assets beyond 24/7 access and various transaction settlement mechanisms. . If crypto assets get too close to the banking system, censorship resistance becomes almost impossible.

Why do we have to develop the “should theory” here? “Stablecoin” is an imperfect term for a variety of blockchain-based assets with a wide range of properties and very different mechanics. Beyond fixed prices, the collapsed algorithmic stablecoins TerraUSD and USDC, for example, have little in common.

Experimental projects gaining momentum

In the wake of the recent banking crisis, stablecoin experimental projects are booming. Sovryn, a Bitcoin-based DeFi (decentralized finance) protocol, today announced the Sovryn dollar, which is fully backed by Bitcoin (BTC). Similar experiments are being conducted with gold-backed stablecoins.

Former CEO of cryptocurrency exchange BitMEX, Arthur Hayes, recently announced the launch of NakaDollar, a stablecoin issued by multiple cryptocurrency exchanges that list Inverse Perpetual Swaps. presented an idea.

I can’t vouch for the soundness of these experimental ideas, but in general experimentation is a good thing. USDC has shown the world that stablecoins, backed by safe investments and banked cash, remain resilient even if the banks that play a key role in the structure fail.

Tether, the company that issued the stablecoin Tether (USDT) and has garnered both good and bad publicity, has not only grown despite false information being pinned down by New York state prosecutors. It’s going very well.

But cryptoassets were born to provide an alternative option to banking and finance. There are definitely people who prefer the “protocol risk” of stablecoins where everything is deployed on-chain to the “platform risk” of stablecoins with bank accounts. It should be.

|Translation and editing: Akiko Yamaguchi, Takayuki Masuda

| Image: Circle CEO Jeremy Allaire (Danny Nelson/CoinDesk)

|Original: The Banking Crisis Has Been Good for Stablecoin Experimentation

Banking Crisis, Good for Stablecoins[Opinion]| coindesk JAPAN | Coindesk Japan appeared first on Our Bitcoin News.

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 21.03.2023

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