The Doom of the Stablecoin Industry?

[Abiky]

According to Crypto Briefing, central banks have suggested governments worldwide to ban stablecoins from existence (or at least, impose heavy-handed regulation). It seems that they see stablecoins as a threat to the existing monetary system. Central banks have recommended to prohibit the use and issuance of decentralized stablecoins (like DAI and bitUSD) within the mainstream world. If governments follow their recommendations, does this mean that the stablecoin industry is doomed?

I wasn't surprised about the news, since central banks and governments have long dominated the world's economy. While crypto is still decentralized, the market is largely dependent on Fiat as we speak. A ban on stablecoins might be harmful for the price (and possibly mainstream adoption) of crypto. Blockchain tech will still be alive and running, no matter what governments' actions will be. But mainstream people will look elsewhere due to decaying prices across the market.

For those unaware, here's the link to the article by Crypto Briefing: https://cryptobriefing.com/central-banks-recommended-ban-stablecoins/

What are your thoughts?

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[DarkDays]

One of the suggestions is outright prohibition, doesn't seem like it's the most likely candidate.

There is a zero percent chance that stablecoins will be banned, if that's the case, you'll have to ban practically every other derivative instrument too. Goodbye futures, options and swaps for all markets, not just cryptocurrencies.

These are basically derivatives of fiat, just like people trade futures for wheat, oil and gold. Some futures are physically delivered, just like how stablecoins can be redeemed.

They're just feeling threatened, and who can blame them!

[coupable]

I can agree with all the stated recommendations made about controlling actual existing stable coins due to the reasons detailed in the article. But i noticed that the reasons don't include the risk of people who may lose their deposits in investing in those tokens called stable who are backed by nothing. This leads me to think to other cryptos that may get a price stability and becomes less volatile, this also includes bitcoin himself, would it also be considered as a threaten to the global financial stability.

[Utoy101]

What are your thoughts?

I can't deny the fact that the entire cryptocurrency market will become more riskier if stablecoins got ban by government, people will be caught off-guard during pump and dump action of cryptocurrency especially during the dump period and there won't any safe-Haven to run to expect FIAT which won't flexible for usage by trader considering the very number of exchanges that offers FIAT trading pairs

[VDraci]

I thought government can have access to only centralized coins, stable coins like DAI and others are decentralized, it will be stupid if the stable coin team submit to whatever the government planned, crypto space can survive without stable coins but believe me this will have bad impact on traders

[Ucy]

A well decentralized stablecoin can't really be stopped in my opinion.
However, stablecoin developers could consider what the governments are worried about and try to implement them in their codes. If it's about taxes, then  implement a tax system. You could basically list out those things the governments are worried about and try and implement them on stablecoin codes

Sometimes I wonder why developers don't consider creating a stablecoin that is not backed by any country fiat currency...so the governments don't have good reasons to bother them. Just create a cryptocurrency that is as stable as fiat currencies but not tied to any fiat currency!

By the way, the governments could really benefit from allowing "their stablecoins" to be used by cryptocurrency communities. They could simply suggest how they want the stablecoins to work and benefit them, then the communities and developers could implement the suggestions as long as they don't affect the principles of decentralized crypto.

[masterrex]

Thats it! the Central Banks are already threatened by the existence of Stable-coins. by the way, I'm not against the proliferation of those so-called Stable coins in the market. but it should be regulated strictly, in that case, we will be able to identify those Stable-coins that are not truly back by a stable asset like Fiat, or Gold. The Stablecoins should stay in the crypto market and remain as an option in the ever-changing cryptocurrency industry. 

[kingzpro]

Yes the threat remains to stablecoins but the real threat feom crypto and all these stable coins is to banks themselves because even if these stablecoins get banned large countries are coming with their own national coins that will be fiat backed so in short the coming days will not be good for banks.

[tabas]

They are making CBDC and that's why eliminating the competitor would be ideal for them. I think it's going to be a tough time for stable coins and who are using stable coins here? are you many to worry about this?
Because me, I don't.

[qazgroup]

I think there is no way any government will ban stablecoins, infact there use will increase in coming years, banks should work to upgrade themselves with blockchain tech and also integrate all services related to crypto and stablecoins, if they just kept complaining they will be left far behind.

[seoincorporation]

The topic was started in the G20... they calls stablecoins a systemic risk. And is really fun because with printed money the government's just can print more money and increase their debts, but is a different story with stable coins. Govs can't print them and that's why they are afraid.

If those coins get banned that would be really hard for the crypto world.

[bittraffic]

I think they can only ban any stablecoin on the grounds of scam, fraud or if they detect any other illegal activity other than that i am quite sure that they cannot be banned without any solid reason, stablecoins are valuable product of cryptocurrencies and just like crypto they will continue to be used even if some country announce ban.

Nope, its been done before. If they really will ban it all they could have done that to tether before BTC blow up this big. Its the stablecoin that runs all the markets and now the rise of DAIs is coming for the fight of decentralization which they wanna try killing. These collateralize stablcoins are growing, EOS are also planing to have its DAI all the other platforms are going to follow soon.

[Abiky]

One of the suggestions is outright prohibition, doesn't seem like it's the most likely candidate.

There is a zero percent chance that stablecoins will be banned, if that's the case, you'll have to ban practically every other derivative instrument too. Goodbye futures, options and swaps for all markets, not just cryptocurrencies.

These are basically derivatives of fiat, just like people trade futures for wheat, oil and gold. Some futures are physically delivered, just like how stablecoins can be redeemed.

They're just feeling threatened, and who can blame them!

I guess that central banks are starting to "feel the heat" of the crypto/Blockchain revolution. They don't want people to use an alternative financial system that's decentralized by design. After all, they want to maintain power/control over the world's economy. Since decentralized cryptos cannot be controlled, they become a threat to the existence of the current monetary system.

I don't think that central banks will succeed in "phasing out" stablecoins in their entirety, but they could encourage governments to regulate the industry more thoroughly. Decentralized stablecoin solutions will remain untouched, but those offered by a central authority (like it's the case with Tether and Binance USD) will be the ones heavily impacted by fierce regulations imposed by governments worldwide. This is good for the end user in the sense that corruption and fraud is reduced at a minimum. No matter what governments' efforts may be, they cannot disrupt decentralized alternatives to existing Fiat. Of course, it's still possible that decentralized stablecoin developers would comply with governments' demands by modifying the code. But the fact that they're open source, allows anyone to launch a "better version" that has not been "tainted" by governments' interests.

Nonetheless, we'll see how this plays along as people begin to lose trust in the world's banking system. The more people use stablecoins over regular Fiat, the worse it'll be for central banks' prominence within the mainstream world. With stablecoins you have the "best of both worlds" combining the power of Blockchain technology and the stability of Fiat. Eventually, governments will launch their own CBDCs which would serve the same purpose as a centralized stablecoin. Only decentralized ones will make the difference as it's outside the scope of third-parties. As long as there are people using and supporting the Blockchain industry, nothing should go wrong. Just my opinion

[aemma]

I see one huge thing there, and that is fear of the crypto space and what it is going to achieve in the near future. Talking about stablecoins, they play in huge role in this crypto space and without them I wonder what will happen when there is a bear market and so on. Also, although the government have various powers to do things but placing a ban on stablecoins might not pull through as it will affect a lot of things maybe restrictions on its use outside the crypto space will set in. This is just the beginning and it's a matter of time for cryptocurrencies to start taking over gradually, and nothing will stop its advancements. Lastly I think it's time for decentralized stablecoins to be fully active.

[Heisenberg_Hunter]

Stablecoins are one among the most important part of the decentralized crypto economy. You could never depend on fiat all the time for trading in bitcoin and certain popular stable coins like USDT and TUSD are necessary for huge volume tradings. In general, crypto currency markets are highly volatile in nature and you will surely require a stable coin to trade and receive the profits.

If for instance, a person has 7000 tether and if BTC dumps to 6000 USD overnight and pumps again the following day, it would be very much difficult for the traders to withdraw each and every time to their fiat money or to the banks. If banks see through the +1000 USD profit within a day or two, they would be questioning up the trader. These kinds of situations occur when the person has  7000 USDT but if they are trying to trade with 5-10 bitcoins, they might be facing 5000-10000 USD profits and loss within hours which would certainly make the trader even more questionable.

Apart from the above mentioned facts, bitcoin market is certainly new and we need time for them to mature over the period. Until then, we could be USDT for real world transactions. I always use bitcoin for global transactions but some traders might not go well while considering volatility. Hence, stablecoins might rise in adoption which certainly could pose a risk for governments and the banking system. The government is trying to minimize the usage of bitcoin and also trying to reduce the exposure of people towards cryptocurrency in general which wouldn't last longer.

[Impacto]

I can understand their plight and I know where they are going. If this ban will be only for stable coin then it will have a huge effect. They are just looking for a way to cripple or stop the crypto market growth. I hope they don't succeed in doing this.

[coinfinger]

There is a zero percent chance that stablecoins will be banned, if that's the case, you'll have to ban practically every other derivative instrument too. Goodbye futures, options and swaps for all markets, not just cryptocurrencies.

These are basically derivatives of fiat, just like people trade futures for wheat, oil and gold. Some futures are physically delivered, just like how stablecoins can be redeemed.

The only reason for governments are always imposing strict rules and guidelines on every momentary system is, money laundering as it may result in aiding terrorist activities. Governments may think about prohibiting every derivative instrument when they are easily redeemable AND ALSO when they comes with LESS FLUCTUATIONS.

Why governments are not bothering about every other derivative instruments? Because, they are being traded with unlimited fluctuations; they may value $1 today and may value $100 tomorrow and vice versa also true. So, the chances for those derivatives to be used as a momentary system is less which means less chances for being used for money laundering.

But, here the special case of stablecoins is, even it is also a derivative, it may fluctuate +/-5% or hardly +/-10% on day to day basis. If you ignore these fluctuations, then you may assume they are purely stable like fiats. Then they got more chance for being used for money laundering. So, more chances for governments to ban them at any time like how they did with Liberty Reserve payment processor (the prominent payment option in mt.gox).

[bittick]

I think you should take this as a serious problem. I remember when bitcoin has already threatened by so many countries in the world to be banned but it never happens till this time. Just think about the central bank will need more time to give admission to the possibility for the stable coin to replace fiat in the future.

[kensaii]

It up to each country and government to implement on how to control cryptocurrency in general, not just stable coin like USDT. For all I know, government label and category stable coin into cryptocurrency that carries risk even greater than normal cryptocurrency like BTC, ETH,... If you don't trust the fiats then it's the same for stable coin. Instead of backup by a legitimate government, stable coin back up by what? Don't tell me you hoarding stable coin and hodl it like it was a normal cryptocurrency.

[spike420211]

This is pretty funny. Half a year ago, these same people spoke about the possibility of full approval of stable coins, and now they complain about their insecurity for banks.
I do not think that they will be able to ban stable assets, it will be ridiculous.
In addition, this can only be done within the framework of certain jurisdictions, although even in this case it is not clear to me how they are going to track the user's trading on the exchange, or they will simply close them.