The Fed provided forward guidance on rates at Jackson Hole on Friday. Rates are going down. The real economy is not doing well and neither are financial markets. The downward revision of the last jobs report is one sign of this. The housing market is another, as house prices are cratering. Meanwhile stock markets are making new all-time highs.
There will be another non-farm payrolls report before the September 2024 Fed meeting and all of this in an election year. Whatever the Fed does (at the end of the day they will print, a lot), there are signs that the system is broken and there will be some kind of monetary reform down the road. As the USD is the global reserve currency, this will necessarily be a global reform.
This is where crypto and blockchain technology comes in. First, the boring regulatory part (scroll down for more juice).
The time for US stablecoin regulation is now
For the US to fully realize the benefits of these new technologies, we need Congress to pass a strong legal framework for stablecoins
Candace Kelly, Blockworks
The EU has already presented its stablecoin framework under the so-called “Stablecoins Regime” of the Markets in Crypto-Assets Regulation (MiCA). Tether (USDT), the largest stablecoin, has critized these regulations as there could be a concentration of risk. Tether may be removed from European exchanges as a result.
Stablecoins are popping up everywhere and legislation is being put in place. The most recent announcement coming from Russia:
The (Russian) government plans to issue stablecoins linked to the Yuan and BRICS currency basket.
CoinChapter
The State of Wyoming is also looking to launch its own stablecoin in Q1 2025.
There are platforms that allow the creation and management of stablecoins, such as M^O. The BIS (Bank for International Settlements) has a project called Pyxtrial aimed at managing the balance sheets of stablecoins and other tokenized RWAs (real-world assets).
Pyxtrial demonstrated that the balance sheets of asset-backed stablecoins can be supervised.
Project Pyxtrial has the potential to monitor other tokenised products that are backed by real-world assets. The technology is a first step towards a tool that could support supervisors and regulators in proactively detecting issues in stablecoin backing and aid the development of policy frameworks based on integrated data.
BIS
Once the stablecoin framework and the tools are in place, crypto and blockchain development will speed up. A few test grounds already exist. Here are a few exciting ones, presented in videos: El Salvador, Argentina and Liberland.
Stablecoins will not solve the problems in the financial system, but they are necessary for the next stage. Crypto projects need to work within the developing regulatory framework. The arrest of Telegram founder Pavel Durov in Paris yesterday is an example. French authorities attested “a lack of moderation and cooperation with law enforcement” (disposable mobile numbers, data sharing in investigations etc.). In a recent interview with Tucker Carlson, Durov said the FBI has interest in Telegram’s source code. This should work both ways between those desiring freedom those desiring control of everything (read: open source code CBDCs).