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Stablecoin regulation could boost the U.S. dollar and its global adoption.
A former top U.S. financial regulator believes that clear stablecoin regulations would be beneficial for the U.S. dollar, even as some lawmakers argue that it could be harmful to the financial system and economy.
Brian Brooks, the former CEO of Binance's U.S. arm and a former acting U.S. Comptroller of the Currency, told CNBC that the Biden administration's apparent opposition to stablecoins is less than ideal.
"If only the U.S. government would create a framework that allows dollars to back stablecoins in a regulated way, that demand would flourish," Brooks said. "That would be good for dollar adoption globally, but as long as we're allowing governments to suppress stable coins, you have the sort of push-pull phenomenon, which is what creates the problem."
Stablecoins are crypto assets — usually tokens — pegged to a fiat currency, such as the U.S. dollar, or another asset, such as gold. They are often used to facilitate cross-border payments and to reduce volatility in the cryptocurrency market.
Brooks cited foreign demand for U.S. dollar-pegged stablecoins in countries experiencing high inflation, where it may be difficult to open a U.S. dollar bank account, as a major driver for stablecoin adoption.
"Demand for [stablecoins are] a way for us to make the dollar relevant again at a time when governments around the world are looking to decouple from the dollar," Brooks explained to CNBC. "That's really a pretty important policy issue. It's not about crypto, it's about the role the United States plays in the financial system."
Brooks' statements come at a time when stablecoins remain one of the hottest topics in the wider industry — particularly from a policy perspective.
Early this week, payments giant PayPal announced the launch of its own U.S. dollar-pegged stablecoin. The token will exist on the Ethereum blockchain, which JPMorgan believes could boost activity and utility on the network.
Leading House Democrat Maxine Waters immediately expressed that she is "deeply concerned" about PayPal's stablecoin — and previously criticized a high-profile stablecoin bill that advanced last month as "toxic and problematic."
The debate over stablecoin regulation is likely to continue in the coming months and years. However, Brooks' comments suggest that clear and well-designed regulations could actually benefit the U.S. dollar and its global adoption.
