[Parker] Who will be the final winner of the Stablecoin three-way race?
[Parker’s Crypto Story] Stablecoins including Tether (USTD) have experienced a surge in transactions since February, which coincides with the beginning of the outbreak. There are a wide range of yet-to-be-developed stablecoins being researched, with central bank digital currency (CBDC) being the best example. A growing call for the adoption of the CBDC is being heard in the regulatory circle. Another notable player in the private sector is the Libra cryptocurrency being developed by Facebook. The Libra project released a new white paper in April confirming its intention to release a coin this year. Which coin will become triumphant? The stablecoins that are actually traded in the market are existing stablecoins such as Tether. Compared to the CBDC and Libra, they are considered to be first movers, which can be a great advantage. Tether became so influential that it is accused of being ‘too big to fail.’ But its prominent status could be problematic. The Bitfinex exchange was accused by the New York Attorney General of using Tether's funds to cover up $850 million in funds missing since mid-2018. U.S. District Judge Katherine Failla expressed a cautious view, saying that imposing a penalty could be tough due to the nature of the alleged fraud. The indictment, however, exposed the weak point of the existing stablecoin. Therefore, those stablecoins have both advantages and disadvantages associated with being pioneers. The case will be decided in September. The CBDC is the new kid on the block. The scope of the CBDC is wider than many people would think. The common ground is that they are all designed to convert the existing currencies into digital currencies. China is taking the lead in this segment. The Chinese government has taken a special interest in the digital currency and has developed the term Digital Currency Electronic Payment (DCEP). A string of big announcements regarding the issuing of the digital currency were made in April. One of them includes a report on April 19 saying that the new form of currency could be during in Beijing Winter Olympics set for 2022. The Industrial and Commercial Bank of China released a white paper outlining its plan to issue and manage a blockchain system on April 21. Xiong'an New Area said on April 22 that it will support payments using digital Chinese yuan. Starting May, the DCEP will be put to use in some parts of China. Facebook’s Libra has also thrown its hat into the ring and claims a unique position in the stablecoin universe since it comes under a regulatory framework. Still, it is a private player, which is in contrast to the CBDC, which controlled by the government. Private companies will likely to become a predominant force in the stablecoin industry. A survey by IBM and the Official Monetary and Financial Institutions Forum, an independent forum for central banks, supports the prediction. In the survey of 23 central banks, 73 percent of the respondents said that private sector digital currency will be widely used within five years. From this perspective, any operator capable of bringing stablecoins to the mass market will likely claim a stake.