Panelists in this stablecoins discussion include Yves-Michel Leporcher, lecturer at European Tech School, Ewoud Barink, Business Development Director at Worldpay, Avishkar Sharma, Head of Crypto Partnerships at Checkout.com, Teana Baker-Taylor, VP of Policy & Regulatory Strategy at Circle, and Radoslav Albrecht, Founder & CEO of Bitbond.
Stablecoins are one of the intense focus areas in the Markets in Crypto Assets (MiCA) Regulation that just got approved by the European Parliament in April 2023. In spite of the restrictions that MiCA may impose on the issuance of stablecoins, experts at the 8th European Blockchain Convention still support the merits of stablecoins and express optimism about the unlimited financial potential that stablecoins unlock.
Not All Stablecoins Are Created Equal
In the wake of Terra’s collapse in 2022, Teana states that the term “stablecoins” is misleading. She prefers to use different terms to refer to this asset based on its stabilizing mechanisms, such as tokenized cash, e-money tokens, or asset-referenced tokens.
The term stablecoin is terrible. We should stop saying it. It infers that a lot of different types of assets are similar and I think last year has shown us that not all stablecoins are created equal.Teana Baker-Taylor, VP of Policy & Regulatory Strategy at Circle
Stablecoins Are Here To Stay
Stablecoins unlock endless possibilities for the financial world, especially for the unbanked that have long been excluded from the financial systems. Radoslav foresees a future where 40% of the total payments volume is very likely to be transacted in stablecoins.
They believe that the adoption of stablecoins is not cannibalizing the current financial markets but creating a bigger ecosystem that brings in people that have long been excluded from financial institutions. It unlocks a more inclusive financial world, as Teana states, “This is new economic activities, it’s not replacing or eating anyone’s lunch.”
Due to its open-source characteristics, experts highlight how stablecoins provide access to a new rail that can easily integrate with traditional banking infrastructure while offering constant upgrades.
Regulatory Challenges and the Impact of MiCA
During the 8th European Blockchain Convention, the panelists discussed the challenges of regulations in shaping the future of stablecoins. The focus was on MiCA, which has emerged as a prominent regulatory topic. The concerns about the restrictions and market disruptions that MiCA may bring to stablecoins were also discussed in the panel “MiCA and the Challenges of Regulating Crypto.“
MiCA aims to bring an end to the unregulated crypto market in Europe. Under MiCA, stablecoins are classified as either e-money tokens or asset-referenced tokens. While stablecoins are not banned, MiCA sets essential rules such as the requirement for private stablecoin issuers to maintain appropriate minimum liquidity as a reserve.
Teana emphasizes the value of establishing standards through MiCA. Sharma shares the aspiration for global consensus among regulators, even though it may seem like an ambitious utopian dream. Regulations provide clarity and comfort for institutions to step into the crypto ecosystem. However, Teana highlights that while MiCA exists as a regulatory framework on paper, its implementation is pending, leaving many aspects yet to be resolved.
Dive into the TradFi and banks’ viewpoints on MiCA and stablecoins in this article: Decoding Banks and Laws in the Crypto Realm!
The Evolving Landscape of Stablecoins
According to Radoslav, the future holds a lot more use cases for stablecoins. Their usage will extend beyond payments and remittances as institutions will also utilize them to make transactions. Both B2B and B2C sectors are expected to embrace stablecoins in the years to come.
Radoslav also anticipates the increasing emergence of non-fiat-based stablecoins, pegged to a diversified basket of assets. This approach aims to safeguard the purchasing power of the currencies. He emphasizes the need for competition to determine the optimal combination of assets that form the basket.
Teana acknowledges the inherent unpredictability of the market’s future. However, she highlights that the introduction of asset baskets will introduce complexity to stablecoins. Ultimately, the success of stablecoins will come down to their use cases and under what scenario are they designed to be used.
More EBC insights on the future of tokenization and crypto market marking:
- Tokenization: What Traditional Bankers Have to Say?
- The Future of Crypto Market-making: What’s the Role of Regulations and AI?
- The Rise of Digital Assets: Benefits, Challenges, and How to Become a Winner