Stable Coins - From Completely Off Their Radar, To Regulators New Obsession...

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It's always been one of the most discussed topics in crypto - regulations. That's because there's virtually infinite space to speculate on what may happen, and if and when it does, odds are it will effect you for better or worse.

It was in one of these recent conversation that it suddenly hit me - "do you realize how strange it is that every coin we've mentioned so far is a stable coin!?" I said.

For years we functioned under the belief that regulators were far too distracted with coins that could be pumped and dumped, and the launch of new ones (ICOs), to divert any resources to coins that will always be worth the same amount, give or take a couple cents.

Then, just about a year ago - the Tether controversy dominated headlines. 

The 'news' was really just the rumors the crypto world had been hearing for awhile, suddenly receiving a lot of mainstream press.  The accusation being that the USD reserves that 'backed' USDT's pegged $1 value were a lot smaller than the supply of USDT floating around the market.

It turned out true, and Bitfinex resorted to some creative crowdfunding to close the gap. I'm still unsure on what the final answer to 'how did this happen' was. Bitfinex blamed corrupt bankers in corrupt countries, and the fairly large group of traders who hate them insisted that wasn't enough to explain it all.

At the time the uncertainty brought Tether's growth to a grinding halt, but they've now picked up where they left off and Tether's popularity is on the rise again, and has been for several months now.

Tether actually plans to aggressively work to increase adoption of its USDT token, recently partnering with several e-commerce organizations. The Principal Technical Director of Tether, Paolo Ardoino, says "Merchants need to have a stable currency to protect their business from the volatility of other crypto assets such as Bitcoin . Tether is being widely used by merchants and e-commerce teams, but since this is a new trend we are still collecting and evaluating the data”.

Like it never even happened.

In retrospect, it's like night and day looking back on countless people making predictions of the impending doom of Tether and Bitfinex, compared with what actually happened.

The only lesson learned - it's impossible to predict what regulators will deem worthy of 'cracking down' on.  This uncertainty has motivated investors to do what they can to play it safe whenever possible, with many deciding to transfer assets to a regulated cryptocurrency exchange instead.

Just when you thought stable coins were out of the spotlight - along comes Facebook.

With the Tether fire still smoldering but no longer a ‘hot topic’, it felt like we were ready to move on, and potentially enter a period with no major controversies.  Instead, what came next was so controversial, news outlets that never cover crypto felt the need to jump in. 

The announcement that Facebook wants to create a cryptocurrency sent politicians into a frenzy.  The timing couldn't have been worse, following a string of non-crypto related scandals.

It's a dangerous mix - lawmakers who don't understand the tech, and with the belief they're stopping an evil company from some huge power grab.

On that note, we have the first ridiculous 'solution' to be proposed - Sylvia Garcia representing Texas 29th congressional district wants to classify stable coins as a security, proposed in what she's calling the "Stable Coins Act of 2019".

The one hope we have now as an industry is that finally there's a presence in Washington of lobbyists who can hopefully educate lawmakers and help insure attacks meant to stop Facebook specifically doesn't come with massive collateral damage.

So that's where things stand today, and really, literally anything can happen from here. So I will try my best to keep all of you updated!

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Author: Ryan Stewart
Northern California News Desk


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