Valor Capital Group partner Brian Brooks believes that clear regulation of stablecoins is beneficial for the United States dollar — although some US lawmakers argue that it could harm the financial system and economy.
Brooks — the former CEO of Binance's US branch and former Acting Comptroller of the US Currency — told CNBC that the Biden administration's apparent stance against stablecoins is less than ideal.
“If only the US government could create a framework that allows dollars to back stablecoins in a regulated way, demand would grow,” Brooks said. "Which will be good for global adoption of the dollar, but as long as we allow governments to suppress stablecoins, you will have a push-pull phenomenon, which creates problems," he added.
A stablecoin is a crypto asset — usually a token — that is tied to a fiat currency, such as the United States dollar, or another asset, such as gold. Brooks cited foreign demand for stablecoins tied to the United States dollar in countries experiencing high inflation, where it may be difficult to open a bank account in United States dollars, as a major factor.
"The demand for [stablecoins] is a way for us to make the dollar relevant again at a time when governments around the world are looking for ways to divest from the dollar," Brooks also explained to CNBC. "That really is a very important policy issue," he added. "This is not about crypto, this is about the role the United States plays in the financial system."
'Very Concerned' about PayPal stablecoin
Brooks' remarks come at a time when stablecoins remain one of the hottest topics in the industry as a whole — especially from a policy standpoint.
Earlier this week, payments giant PayPal announced the launch of a stablecoin tied to the United States dollar. The token will exist on the Ethereum blockchain network, which JPMorgan said could increase activity and utility on the network.
Top Democrat Maxine Waters immediately stated that she was "deeply concerned" about PayPal's stablecoin — and previously criticized last month's high-profile stablecoin bill as "toxic and problematic."