- Michael J. Hsu talked about stablecoins.
- He discussed three main factors: stability, interoperability, and separability.
On April 8, Michael J. Hsu, the acting comptroller of the currency discussed stablecoins at the Institute of International Economic Law at Georgetown University Law Center. In his opening remarks, he mentions stablecoins as a ‘hot topic’ in Washington. The primary motive of this discussion was to understand the importance of stablecoins and to establish three questions on a policy that will help understand the architecture of the same.
He said that it is very important to understand stablecoins in the right manner, especially from a regulatory policy perspective as the opposite can harm people. He talked about the large part of the population that has exposure to cryptocurrencies and also mentioned that scams, hacks, and frauds pose a great threat to the market. However, the comptroller mentioned that the size of the whole market is larger than the affected portion. He said, “Stablecoins support that entire market.”
Hsu also talked about the advantages that stablecoins have over fiat currencies in blockchain-based ecosystems as the former is “blockchain native.” He has discussed the architecture of stablecoins with the help of three factors: stability, interoperability, and separability.
While talking about the stability of stable coins, Hsu said that a banking approach instead of a money market fund approach will be more effective. Coming to its interoperability, he said that without it there will be high risks of the digital ecosystems being fragmented and exclusive. Then he spoke about the separability of stablecoins and mentioned that the risks involved can be avoided by conducting their issuance in a standalone bank-chartered entity.
To conclude his discussion he said, “While there remains a wide range of perspectives on crypto’s future, there appears to be an emerging consensus that rules-of-the-road and safeguards are needed today to protect people and balance the risks and benefits of blockchain technology as it continues to evolve.”