I appreciate Chad for keeping my feed curated with the best Internet garbage out there. Today, he sent me a conspiracy-theory-disguised-as-editorial titled ‘Snow Job’. The idea is that Big Banks (and, more importantly, the Washington bureaucrats that the author feels compelled to call out by name) seek to centralize control of DeFi by justifying regulation of ‘stablecoins‘ — cryptocurrencies pegged to USD.
Stablecoins are basically the dark web equivalent of Starbucks customer credit — an asset regarded by some internal system as revenue at the point of purchase, held as credit owed to the customer, should they choose to redeem it in the future. Most are literally tied to a Scrooge-McDuck-ian vault full of cash, gold bullion, or the blood of virgins. But sometimes, their value is insured through government bonds or the type of complicated math that almost kept me from graduating high school.
Bottom line, they’re the backbone of crypto liquidity — it’s easier and cheaper to convert Ethereum to, say, ‘USD Coin’ than actual USD, allowing for the sort of untaxable, border crossing transactions that cause Kim Jong Un and the current Chair of the Federal Reserve to lose sleep. Government regulation was inevitable.
The rub is, stablecoins don’t yet pass the ‘Howey Test’, which determines whether the SEC has grounds to regulate a financial asset. The government can regulate any investment contract, but that implies the promise of financial gain, while stablecoins only promise you can redeem them for a dollar. So it may be a while before this equitable technology gets nuked. The question is, will enough Americans adopt it before then to change the tide? Or will the right + click + savers win out in the end?
I wish Washington would recognize that NFT technology serves as a solution to their current problem with web2 technology businesses and consumer data ownership. It is literally a technology that can be publicly governed with transparent and efficient markets, facilitate standard regulated data models, and provide users with the choice to package and sell their data to businesses if they so choose. It provides a way to preserve the existing web2 infrastructure while removing the competitive advantage (read: predatory moat) of tech giants.
For our part, our company intends to use stablecoins to facilitate transactions for everyday businesses with a Point of Sales solution that can be a conceptual value accessible to our core customers. It’d be a shame to see ourselves on the backend of some regulatory system just because the geriatricacy thinks Finsta is a product.