Blockchain Association announces the launch of the Stablecoin Working Group
The Blockchain Association is pleased to launch the Stablecoin Working Group, which will lead the Blockchain industry’s collaboration with U.S. regulators and legislators as they learn about the potential of stablecoins to positively affect the world economy, and develop policies to support, adopt and regulate them. This group will be co-chaired by Gus Coldebella of Circle, Brian Brooks of Coinbase, and Tim Welsh of TrustToken.
Stablecoins are crypto tokens designed to maintain a stable value. They bring the advantages of crypto — including near-zero transaction costs, near-instantaneous settlement, and blockchain finality — to a token without price volatility. For these reasons, they will play an increasingly important role in commerce, online transactions, and in the development of an open finance ecosystem. The announcement of Libra prompted policymakers in Washington to focus on different types of stablecoins, including those backed by the US dollar, those backed by baskets of fiat assets, and algorithmic stablecoins. We will work with policymakers as they continue to think about this important innovation, including bringing the following views to the table:
Dollar-backed stablecoins support US monetary policy
Blockchain industry participants and some U.S. officials have acknowledged the need to create a tokenized version of the U.S. dollar. (Other countries have been studying “digital fiat” currency tokens for years.) Blockchain Association members Circle, Coinbase, and TrustToken already provide such token in full compliance with existing U.S. laws and regulations.
Tokenizing the U.S. dollar will extend its reign as the world’s reserve currency. Because tokenized sovereign currencies lower transaction costs and reduce inefficiencies, if the U.S. fails to tokenize the dollar, businesses and countries around the world could look to other fiat-backed digital currencies — to the detriment of our national interest.
Indeed, countries such as China, Russia, Sweden, and Turkey have already launched or proposed a tokenized form of their sovereign currencies.
The United States’s embrace of innovation has long been one of our core competitive advantages, and it should be no different in our approach to stablecoins. At the same time, we look to the government to set broad, and necessary, guard rails for our financial system.
A stablecoin fully backed by U.S. dollars creates one of those rare “win-win-win” situations.
First, the federal government retains complete control of monetary policy, because a tokenized dollar only exists with the backing of a dollar created by the Federal Reserve — not risky assets, foreign currencies, or offshore accounts..
Second, it allows U.S.-based innovators to do what they do best: innovate efficiently.
Finally, consumers and the wider economy benefit from reduced transaction costs and wait times.
Letting the private sector build the technology while ensuring the public sector can set monetary policy does not mean the U.S. government has no role to play in regulating assets like stablecoins. Indeed, the government can play a role in supervising stablecoin issuers to ensure that they are holding the underlying dollar assets as advertised. And because the asset is tied to the dollar, the government’s monetary policy continues to dictate the amount of dollars in circulation.
We look forward to working with Members of Congress, U.S. regulators, the Federal Reserve, and others to promote the adoption and sound regulation of stablecoins in the United States.