Will governments destroy stablecoins in the long term?

[Abiky]

As stablecoins become more popular in the mainstream world, many are starting to wonder whenever governments will allow the industry to flourish or destroy it altogether. We've seen how interested central banks and mainstream governments are in launching digital currencies of their own. Something like a stablecoin would prove to be a huge threat to the existence of Fiat. I wouldn't put decentralized cryptocurrencies on this, because they're largely unstable. Only stablecoins pegged to the USD like Tether or USD Coin could pose a real threat to the financial sovereignty of Fiat currencies like the traditional US Dollar. Either governments use pre-existing stablecoins as their own, or create new ones from scratch (most likely situation) effectively putting an end to stablecoins' preeminence in the mainstream world.

What are your thoughts?

[devollito]

If goverments want to destroy Stable coin, they probably would destroy it now, why they let Tether printed so much USDT and then make it crash ? We never know who are the real man behind those stable coin. It could be goverments it self.

I think they already know that tether and other stable coin is existed.

[Febo]

Will governments destroy stablecoins in the long term?

I dont see reason why. I see that central banks will compete with stale coins. But to destroy them I cant see it.  USA goverment will destroy value of all stable coins that are nominated in USD. That is what they will for sure do in next decades.

[dothebeats]

Stablecoins would certainly be a subject for some legal discussions especially the creation of one. If an entity can use their existing assets as a proof of their wealth and use that valuation to create stablecoins with the same value, wouldn't that be just creating money out of thin air? Even if it's "backed" by the assets, it is still money out of air considering that there is a high chance that the assets held by that entity wouldn't simply go away all the while retaining control of the stablecoins

I don't think such legal discussions in the future re: stablecoins would invite any distaste from the government. If anything they might as well try to legalize it, or work on legal loopholes to retain it for the economy.

[blockman]

I don't think they'll do that. They have the power to even control those stable coin providers except the decentralized ones. They can still make use of them.
That's why I don't think that it's necessary for them to do it.

[Dave1]

Nah, I don't think that government will go after stable coins, if there is a coin that they should go after, it should be bitcoin and the rest of privacy coins as well. There will be no benefits for them to chase after a coin that is pegged on USD. Stable coins are too centralized as well, so doesn't make sense for them and what is the need to destroy them in the first place? There is no threat whatsoever, besides governments have their own crypto back up crypto called CBCD which is pegged to their local fiat.

[irixo10]

The crypto space has grown so much and therefore I don't think the government will make any move to ban stablecoin, however they can only make moves to launch their own; in this space and current market value, banning will hardly work the only thing that will work is healthy competition, that is, give users or people a reason why they should use government digital currencies other than Tether and others. Also, to back this up, one of the reasons why Tether keeps leading among other stablecoins is because they have succeeded in making it easier and possible to leverage different blockchain networks to carry out transactions thus removing any limitations caused by high fees, that is to say, people want easy payment methods, easy ways to keep their funds without bothering about the government and so forth.
To cut the story short, crypto has come to stay and the government knows that, in fact they know that the world is an innovative place and thus innovations like cryptocurrencies can only keep getting better, so instead of banning or agitating why stablecoins are challenging their central banks, they will come up with their own digital currencies.

[shinratensei_]

It will not happen for sure otherwise so many countries are very interesting to issue their own CBDC. The stable coin could be regulated by the government but i don't think you can destroy this. So many times the governments were trying to destroy bitcoin but they are slowly starting to accept the fact if technology can't be destroyed.
It looks like the stable coin will try to create a big domination in the digital currency for sure.

[hatshepsut93]

How can stablecoins threaten fiat if they are fiat? And they aren't even decentralized, they can easily be fully regulated, because they all have some company that holds the fiat that backs the coins. It's not yet clear which kind of digital fiat will be more popular - privately managed stablecoins or government's stablecoins. A lot of people would trust government more than some company that can pull an exit scam or otherwise fail.

[electronicash]

the US government will favour the use of stablecoin because it will still put USD as the reserve currency despite the crashing economy.
It's yet not clear how they could take advantage of the market but if one day the government-backed stablecoin will be one of the stablecoins used in crypto, it's going to be clear that they like it being part of the crypto ecosystem. the government can easily get tax from it.

[concept2]

That possibility is unlikely to happen. They cant destroy it but regulations can be made to force traders, investors and owners to pay tax. Stablecoins have made enormous impacts on the crypto world (especially USDT) and it would be a nightmare if one day USDT disappear 

Actually, even the US government will not shut down stablecoin

[TheUltraElite]

At this time this is only a "thought", not yet a reality. So firstly a government can develop a stablecoin backed by their country's fiat currency and all users to use that. But only a radical country would limit users to that specific currency and stop usage of others. A democratic country would allow usage of both but keep some perks to make sure their users use their country developed stablecoin more than others.

A government cannot "destroy" a stablecoin. It can stop its use, though even I am not that knowledgeable as to how that is possible by any process other than stopping electricity supply or Internet stop.

Mostly what governments are concerned with is the money laundering that can happen with cryptocurrencies. If they find a possible solution to that then such regulations will not apply. So for some who is not performing any criminal activity, they dont need to worry about any upcoming regulations.

[aprilnot]

Will governments destroy stablecoins in the long term?

I dont see reason why. I see that central banks will compete with stale coins. But to destroy them I cant see it.  USA goverment will destroy value of all stable coins that are nominated in USD. That is what they will for sure do in next decades.

otherwise the coins they release will not be popular. they would first prohibit its circulation in the market by intervening in centralized exchanges for delisting. after that maybe they will make regulations that put illegal stablecoins. at the end only government-released stablecoins were on the market.

[anu1908]

-snip-

that's time consuming and probably not the most efficient method. i do agree that they'll control it instead, force the companies to follow some rules, such as send them details on who request new issuance etc. it would be beneficial for them, no time wasted, and they can easily kill two birds with one stone.

[MishaMuc]

Governments will come up with their own e-currency.
Once this happens, I question wether all other stable coins will survive.
So the easiest way to destroy current USDT-alike stable coins, is to provide a product which can compete.

[Fivestar4everMVP]

I don't think this is ever gonna happen, we tend to credit so much power to the government as if they are God, remember that the people, I mean the citizens are the ones who make up the government, the government so to say have no power without the people, so whatever the people decides will always stand above that which those in government offices decides, cus the people are the ones who put them there.
The government have no power to destroy crypto currency stable coins except the people allow them to, one thing we should always have at the back of our minds is that they can never arrest everybody, if we all come together and say this is what we want, they will have no choice but to fall along, crypto currencies in general is here to stay, no government can destroy any part of it, be it a stable coin or coins with high instability.

[so98nn]

They will think twice before doing that. It could be possible that they themselves are trying to find out the ways to optimise and use the stablecoins in the long term so that they can help digitalise the nation, public sectors and also decrease the burden on the current fiat system. Well, this is all my imagination but what I read in the different bills from different countries that, they are willing to adopt the crypto currencies or identify the best possible scenario where government is using the blockchain technology for developing their own currencies. If they want to make such currency then it would be most probably the stabelcoin to keep their economic cycle stable. So yeah, on the higher note, they won't be banning them real soon or may be never.

[GrosWesh]

I really don't think governments want to destroy the stable coins. On the contrary, they plan to launch their own currencies in the form of a stable coin.

On the other hand, they will certainly want to modify the legislation concerning them! (for example in my country, trading to stable coins is not taxable at the moment).

[tvplus006]

...What are your thoughts?

A real competitor for existing stablecoins is not yet available on the market, but it will definitely be the digital USD, work on which has already begun. And this digital dollar will automatically gain the trust that the traditional dollar has. Of course, the digital dollar will not be the only one, other governments are also working on creating a CBDC, but the digital dollar will definitely be one of the leaders.

[Ozero]

As stablecoins become more popular in the mainstream world, many are starting to wonder whenever governments will allow the industry to flourish or destroy it altogether. We've seen how interested central banks and mainstream governments are in launching digital currencies of their own. Something like a stablecoin would prove to be a huge threat to the existence of Fiat. I wouldn't put decentralized cryptocurrencies on this, because they're largely unstable. Only stablecoins pegged to the USD like Tether or USD Coin could pose a real threat to the financial sovereignty of Fiat currencies like the traditional US Dollar. Either governments use pre-existing stablecoins as their own, or create new ones from scratch (most likely situation) effectively putting an end to stablecoins' preeminence in the mainstream world.

What are your thoughts?

This problem may indeed arise in the near future. On the one hand, existing private and other commercial stablecoins use the currencies of various countries to back their stablecoins. On the other hand, stablecoins of the central banks of states should soon appear in large quantities.
I have already read that when preparing a package of laws that will ensure the circulation of the Chinese digitalized yuan, there will be rules that recognize this currency as the property of the state and prohibit its use by others as ensuring the functioning of other stablecoins.
Since the current stablecoins will effectively compete with the stablecoins of the central banks of states, states may well prohibit anyone from using their currency, or even their stablecoin, to enable private and other commercial stablecoins to function.