Former chair of the Commodity Futures Trading Commission, Timothy Massad, told CNBC’s Jim Cramer on Monday that the government and the market should not ignore stablecoin in the hopes that it will disappear.
As its name would suggest, a stablecoin is a kind of cryptocurrency token meant to be backed by real assets. For example, one stablecoin would be equivalent to $1. Massad said these coins could act as a bridge between “the crypto world and the real world.”
“My concern is we’re not addressing the risks,” Massad said. “I think our regulators often take the view that, well, it’s better just to try to keep them out of the regulatory perimeter, but I don’t think that really works, and I think, you know, the competition from stablecoins could be useful, again, if we address the risks, and they are significant.”
He has been publicly advocating for immediate crypto regulations that would protect investors without having to wait years for litigation or laws to be rewritten. Massad and Jay Clayton, former head of the Securities and Exchange Commission, wrote an op-ed in The Wall Street journal earlier this month arguing the SEC and the CFTC should jointly form a self-regulatory organization to create standards that prevent fraud.
Massad said stablecoins may have the potential to create a faster payment mechanism in the United States, whose system is slower and more expensive than that of some other countries. He added that if the U.S. were to create stablecoin regulations, the rest of the world would likely follow suit. In addition, he said, many countries are already creating their own frameworks.
He also said that despite their limited use stablecoins are already causing banks to reevaluate their systems and think about the ways they might move to improve them.
“I’m sympathetic to a lot of people in government saying … we’re not convinced of the use case here, we don’t really see what the value is in the real world,” Massad said. “But, you know, sometimes it takes time to really discover that.”
Correction: An earlier version misstated the abbreviation for the Commodity Futures Trading Commission.
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