Governments Should Regulate Stablecoins – Not Destroy Them: Research

Governments should regulate stablecoins since the recent developments with blockchain-based payment systems and stablecoins have been long under scrutiny from the regulators and policymakers. Let’s read more in the altcoin news today.

Some of the projects do hit the headlines such as the People’s Bank of China proposal for a digital currency backed yuan which could be used across major payment platforms such as WeChat and Alipay. The global competition for the next wave of financial innovation is also on fire as China, Japan and much of Europe have moved to embrace mobile wallets and contactless payments via credit cards and other smart devices.

The consumers see financial innovation while trying to break down legacy inefficiencies and to also increase access and lower the cost of financial services. While many of the cryptocurrencies have been vehicles for financial speculation because of their volatility, the new stablecoins move closer to meeting the consumer demands for improved security and faster transaction options.
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However, people are still concerned with protecting their funds and controlling their data and this is why governments should regulate the sector.

In such cases, the major developed economies of the world to help shape the regulatory framework around the financial innovations to address consumer protection concerns and also compliance. This is what the international regulators and entities such as the IMF, G20, and FATF. The G7 working group report on stablecoins published last week made it clear that consumer participation in financial services is dramatically changing and innovation will still continue to expand.

The reports also show that the financial regulators understand the need for a viable framework for the new stablecoin projects that seek to transform digitally native interactions with value and money. They have a very strong role for the public and private sectors in innovation to reduce friction and recognize the network effects that the mobile networks have already achieved to do.  The reports also argue that the biggest concern that will need to be satisfied with regard to the potential for market manipulation is the risk that the coins pose to legacy systems and the lack of a clear global regulatory framework.

The fear is that the stablecoins while still decentralized could undermine the entire banking system and strengthen money launderers or cause cracks in the global monetary system.