Insider Q&A: Explaining the fast growth of stablecoins

Dec 6, 2021, 8:54 AM | Updated: 9:13 am

WASHINGTON (AP) — Among the fastest-growing forms of cryptocurrency are stablecoins, which use blockchain technology like Bitcoin and ethereum. Stablecoins are distinct, though, because they are pegged to a government-backed currency, like the dollar, or to gold. With each digital token valued at, say, $1, stablecoins are potentially better-suited to commercial transactions than are other cryptocurrencies that can fluctuate in value.

There are more than 200 stablecoins, worth nearly $130 billion — a six-fold increase from a year ago. The largest is Tether. The second-largest is USD Coin, which is issued by the financial services firm Circle.

The Associated Press spoke recently with Dante Disparte, Circle’s chief strategy officer, about the uses of stablecoins and the federal regulations they may face as digital currencies gain greater visibility. The interview has been edited for length and clarity.

___

Q. What are the benefits of a digital currency? What value, for example, does someone get from USD Coin that they can’t from Venmo or from other ways of exchanging value?

A. Venmo only works if other people use Venmo. A Venmo payment may not converse with a Visa payment or may not converse with a WhatsApp payment and so on. That’s where the email analogy goes a long way: How useful would Gmail be if a Gmail user couldn’t email a user or Hotmail or Yahoo and so on? What if you could upload your dollar to the internet, the same way that you once upon a time uploaded your CDs? That’s exactly what we have done with the U.S. dollar in creating USDC, Circle’s digital currency. It’s to take the dollar, the trust in the dollar, the buyers’ and spenders’ security around how the dollar is a currency of choice around the world and then empowered it with the power of the internet. USDC is a $35 billion digital currency and growing. It has cumulatively powered $1.5 trillion worth of transactions.

Q. What kinds of transactions are these?

A. Visa has enabled USDC across 70 million merchants on the Visa network as a settlement option. Companies like MoneyGram recently announced a partnership with USDC to enable remittances using USDC that have a cash-in-cash-out point at MoneyGram locations around the world. So you’re starting to see this bridge between digital payments and real world payments.

Q. What are the other ways in which stablecoins can be used for payments?

A. You could program a micro payment and send a very small amount of money to someone. For example, as a journalist, wouldn’t you like to get a penny for every “like” of an article that you post? With today’s traditional payment standards, the penny for every “like” is not possible because to send a penny would cost more than the sum of money that would be sent. If, however, you could receive a streaming payment or an accrued payment, or a payment that is contractually obligated to you in software, and it costs no more to send $1, or a billion dollars, all of a sudden you’re unlocking quite a lot of economic activity.

Q. How are you addressing the increasing regulatory focus on cryptocurrencies in Washington?

A. Our company is comprehensively licensed across the U.S., comparable to major payments companies that we compete with. What we have also signaled is the intention of becoming a digital commercial bank ahead of the President’s Working Group on Financial Markets issuing its recommendation that stable coin issuers should, in fact, be banks. So we’re in broad agreement on the direction of these innovations.

Copyright © The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

AP

FILE - In this July 22, 2015, file photo, Corrine Brown, D-Fla., speaks at a hearing on Capitol Hil...
Associated Press

Former US Rep. Corrine Brown pleads guilty in fraud case

A criminal case against former U.S. Rep. Corrine Brown, one of the first Black representatives elected to Congress from Florida after Reconstruction, ended Wednesday with her guilty plea to a tax charge in a charity fraud case. Brown, 75, had been convicted before in 2017 of 18 counts and served more than two years of […]
12 hours ago
FILE- A memorial honors Sierra Jenkins, an education reporter for The Virginian-Pilot and Daily Pre...
Associated Press

Police: Man charged in fatal shooting outside Virginia bar

NORFOLK, Va. (AP) — A Virginia man has been charged in a March shooting that killed a newspaper reporter and two other young bystanders when a fight broke out at closing time outside a Norfolk bar, police announced Wednesday. One of the victims was Sierra Jenkins, 25, of Norfolk, a reporter for the region’s daily […]
12 hours ago
Florida Gov. Ron DeSantis signs the Parental Rights in Education bill at Classical Preparatory scho...
Associated Press

Gay student says school stopping run for student leadership

BUNNELL, Fla. (AP) — A 17-year-old gay student who was suspended for leading protests at his high school against Florida’s so-called Don’t Say Gay legislation says school administrators are now stopping him from running for senior class president. Because of the disciplinary infractions he received for leading the protests at Flagler Palm Coast High School […]
12 hours ago
These May 12, 2022, photos of a Wanted poster provided by the Texas Department of Criminal Justice ...
Associated Press

Texas inmate who escaped bus got out of restraints, cage

CENTERVILLE, Texas (AP) — A convicted murderer who escaped from a transport bus last week got out of his restraints and a caged area before stabbing the driver, and he is still on the run Wednesday, authorities said. Gonzalo Lopez, 46, who was serving a life sentence, was being transported to a medical appointment on […]
12 hours ago
FILE - Then-New York Mayor Bill de Blasio delivers remarks in Times Square on April 12, 2021, in Ne...
Associated Press

Former NYC Mayor Bill de Blasio exploring run for US House

NEW YORK (AP) — Former New York City Mayor Bill de Blasio says he’s considering a run for Congress after a legal battle over the state’s political maps opened up a seat in Brooklyn. The two-term Democrat, who left office at the end of 2021, said Wednesday that he’s formed an exploratory committee for New […]
12 hours ago
US Treasury Secretary Janet Yellen, right, is welcomed by President of the EU Commission Ursula von...
Associated Press

Biden’s burdens grow: Sagging global economy adds to US woes

WASHINGTON (AP) — As President Joe Biden embarks for Asia on Thursday, he’s facing a new risk at home for the economy and his Democratic Party: a global slowdown caused by Russia’s invasion of Ukraine and the pandemic shutting down Chinese cities and factories. The world economy can’t cast U..S. ballots. But it’s a hidden […]
12 hours ago

Sponsored Articles

...
Arizona Division of Problem Gambling

Arizona Division of Problem Gambling provides exclusion solution for young sports bettors

Sports betting in Arizona opened a new world to young adults, one where putting down money on games was as easy as sending a text message.
...
Dr. Richard Carmona

Have you gotten your booster shot?

Do you remember when you got your last COVID-19 vaccination? If it has been more than five months since you completed your primary vaccination series, it’s time for you to get your booster. You may be eligible even sooner depending which vaccine you received. If you are over the age of 50 and received your […]
...
Dr. Richard Carmona

COVID-19 shots continue long tradition of vaccines protecting public health

You want to feel safe. You want your family to be safe. Are vaccines safe? The simple and important answer is: Oh my yes!
Insider Q&A: Explaining the fast growth of stablecoins