Stablecoins are solution to crypto’s banking problem, exec says

The collapses of banks similar Silvergate person surely impacted cryptocurrency exchanges but determination are ways for the manufacture to past without the enactment of banks, 1 enforcement believes.

Crypto exchanges importantly trust connected accepted banking systems for lawsuit deposits, which makes them susceptible to assorted banking issues, according to Bitstamp USA CEO and planetary commercialized serviceman Bobby Zagotta.

The enforcement believes that stablecoins — cryptocurrencies whose worth is tied to fiat currencies oregon different assets — could beryllium a solution to crypto’s banking problem.

“We are presently discussing however stablecoins tin connection america an alternate to accepted banking,” Zagotta said successful an interrogation with Cointelegraph connected March 27. He added that stablecoins could perchance unlock caller capabilities for the industry, allowing it to look astatine banking from a caller position and to spell backmost to the genesis and intent of crypto, adding:

“One of the founding principles of our manufacture is to alteration individuals to transact without dependence connected third-party institutions, truthful determination are different possibilities to beryllium explored, specified arsenic the usage of stablecoins to trim frictions calved of the banking system.”

According to Zagotta, stablecoins supply galore benefits similar faster and much cost-effective transactions, reduced reliance connected banks and accrued liquidity. “Depending connected regulations it's imaginable we volition spot a continued improvement and integration of stablecoins wrong exchanges amid the banking crisis,” the exec stated.

In the interview, Zagotta emphasized that the crypto manufacture needs to fig retired the factors that led regulators to measurement successful astatine Signature bank. That is indispensable for the manufacture to guarantee that crypto-friendly banks are operating successful a harmless and sustainable mode moving forward. He besides cautioned exchanges against creating much hazard for customers by hastily moving lawsuit funds astir antithetic U.S. banks that whitethorn beryllium stressed oregon astatine risk.

Related: Coinbase wants devs to physique inflation-pegged ‘flatcoins’ connected its caller ‘Base’ network

According to the exec, Bitstamp presently has 15 banking partnerships globally, including U.S. banks similar Customers Bank and MVB Bank, arsenic good arsenic European banks similar LHV Bank and Gorenjska Banka that tin process payments successful USD arsenic well. “We are besides successful conversations to onboard United Texas Bank, Western Alliance Bank, Axos Bank, and Cross River Bank to guarantee we support a robust web successful the midst of each of this change,” Zagotta added.

While Bitstamp is looking astatine stablecoins arsenic a imaginable solution to crypto’s banking problem, it’s worthy noting that immoderate large stablecoins similar USD Coin (USDC) aren’t immune to banking problems themselves. USDC issuer Circle faced large issues successful March owed to its $3.3 cardinal exposure to the collapsed Silicon Valley Bank (SVB). The events caused USDC to briefly suffer its 1:1 peg with the U.S. dollar.

According to media reports, the banking situation has been subsiding implicit the past fewer weeks but isn’t adjacent to being over. According to José Manuel Campa, the caput of the European Banking Authority, European banks person remained susceptible pursuing the demise of SVB and the consequent emergency rescue of Credit Suisse by UBS.

Magazine: Unstablecoins: Depegging, slope runs and different risks loom