Among all cryptocurrencies, stablecoins have always faced the most scrutiny from financial regulators. However, they also have supporters who speak about their benefits to the financial world. Recently, the CEO of Cantor Fitzgerald, the custodian of stablecoin Tether, discussed the potential benefits of stablecoins and the future of asset tokenization in the U.S. economy.
During the Chainalysis conference in New York, Cantor Fitzgerald’s CEO, Howard Lutnick stressed how the dollar’s hegemony is crucial to the U.S. economy, Bloomberg reports. He praised Tether and Circle’s USD Coin as properly backed stablecoins that contribute to the cryptocurrency market.
At time of writing, Tether is the third largest cryptocurrency by market capitalization, with a market value of $107 billion. Circle’s USD Coin is the seventh largest cryptocurrency with a market value of $32.25 billion, according to crypto tracking website CoinMarketCap.
Since stablecoin Tether acts as a digital dollar for crypto investors, it becomes a medium for those investors to trade Bitcoin and other cryptocurrencies. Tether accounts for over 50% of the daily trading volume of Bitcoin and up to 70% of some other major cryptocurrencies.
Lutnick, however, is less enthusiastic about central bank digital currencies (CBDCs) and suggested that China might view a digital dollar as a spy wallet, Bloomberg reports.
Why stablecoins are so controversial
Stablecoins are cryptocurrencies whose value is tied to that of another currency, or commodities like gold, or any financial instrument. The SEC, however, says that stablecoins fall under its jurisdictions and should be registered as securities. The financial watchdog has sued many stablecoin issuers, saying that they violate laws designed to protect investors.
The SEC’s fear is understandable because many stablecoin issuers have a history of misconduct in the crypto industry. For instance, in 2022, Terraform Labs’ algorithmic stablecoin TerraUSD was involved in a multi-billion dollar fraud, causing a meltdown in the crypto world, and its CEO, Do Kwon, fled.
Stablecoins can be used to tokenize assets
During the conference, Lutnick discussed other benefits of stablecoins and blockchain technology in finance. He said the technology advancements will soon enable the tokenization of real-world assets such as bonds.
A similar perspective has been expressed by BlackRock, which consistently mentions that its digital asset strategy involves the launch of ETFs and the tokenization of financial assets.
