Toward a transparent and stable cryptocurrency

详细摘要

Stablecoins are moving from the fringes of crypto to the center of finance. The US Genius Act requires issuers to hold reserves one-for-one in cash, deposits, and short-term…

Stablecoins are moving from the fringes of crypto to the center of finance.

The US Genius Act requires issuers to hold reserves one-for-one in cash, deposits, and short-term Treasuries. That makes a digital dollar redeemable. But it does not answer a deeper question: what makes money stable?

For a stablecoin, the answer is liquidity. The closer the reserves are to cash, the more credible the promise of redemption. But a token can remain redeemable for exactly one dollar while that dollar loses purchasing power. Redemption and value are different things.

Value ultimately rests on the sovereign behind the dollar. A Treasury bill is a claim on the US government: its power to tax, to borrow, and to honor its obligations. As stablecoins grow, so will their appetite for those claims. Issuers are already significant buyers.

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