iQoncept – Stock.adobe.com
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Only certain types of stablecoins offer such economic benefits. Coins that promise “yield,” “profits,” or “dividends” are likely securities, and transactions using them will be subject to capital gains tax. Even if a stablecoin were structured like Tether, with no promised yield to the holder (i.e., the asset portfolio was not strictly limited to dollars in bank accounts), it would still There will be no benefit to the economy.
A major and potentially fatal flaw with stablecoins like Tether is the “bank run” issue. A stablecoin that invests in something other than US dollars in a bank account cannot guarantee that its holder can redeem the stablecoin at any time and receive his 100% of the stablecoin's face value. Investment portfolios are not demand deposits, and no investment portfolio can be liquidated all at once without the seller receiving a discount or the stablecoin holder absorbing losses or delaying the receipt of redemption proceeds. Coins (such as Tether) rely on a black swan event never occurring.
A truly pegged stablecoin is assumed to be sold and redeemed for exactly $1, and its value never changes. The yield will not increase and it will not be evaluated. “There's no reason for that.”
Stablecoins are becoming more convenient and valuable, especially for cross-border payments, due to their faster speeds and lower transaction costs. This great feature will increase the demand for “true” stablecoins. Stablecoin sponsors can operate their stablecoins profitably by retaining the fiat yield paid by custodian banks on USD deposits. (The yield is set lower than the bank's general cost of funds/deposits to make deposits attractive to banks.)
Some notable (and logical) conclusions are that a true pegged stablecoin expands the money supply without causing inflation and reduces fiat borrowing costs.
A true stablecoin is a fast currency that is used only for transactions, so it does not pursue the same goods and services as fiat currency. However, as stablecoins become more widely accepted, people will increasingly hold more and more of their savings in stablecoins rather than USD deposits. Therefore, dollar deposits held in bank accounts as backing for stablecoins will gradually grow and become stable long-term deposits. Once these deposits are stable, banks will be able to lend at lower interest rates. There are two different components of the money supply, each specialized in different functions.
Such stablecoins do not have any of the drawbacks of central bank digital currencies (CBDCs), such as giving governments complete oversight and control powers. Instead, stablecoins can be designed as valuable tools for law enforcement and fraud prevention. This easily fits into existing laws, does not harm the banking system, and prevents governments from using the currency as a weapon of surveillance and control.
