00:00Let's talk now to Carlos Eduardo Bernas Amoros from Cornell University's Emerging Markets Institute.
00:06Carlos, welcome and will help us here.
00:08For those who aren't familiar with the term stablecoin, just explain briefly how it differs from Bitcoin.
00:15Well, first of all, thank you for the invitation.
00:17A stablecoin is a type of virtual asset that is pegged to a reference or underlying asset such as the U.S. dollar, the euro, gold.
00:30And its purpose is to provide stability compared to other virtual assets such as Bitcoin, which is way more volatile.
00:39Well, those in the know are obviously converts, and that's understandable when it comes to their enthusiasm.
00:46For those who are not converts and not in the know, how can you regulate this?
00:52And how do organizations who invest in it navigate that regulation?
00:58Well, there's a lot about regulations on stablecoin.
01:02I'll say that Europe with MECA, with markets and crypto assets, and the U.S. with the Genius Act, which is not approved yet, are on the right track.
01:13These two frameworks, even though they're different, they have a lot of common ground.
01:18And I'll say that there are four points to consider when it comes to regulation.
01:23Number one is who is authorized to issue a stablecoin.
01:26Number two is the reserves.
01:29How are they managed and how are they meant to be audited?
01:33Number three, the AML requirements, everything related to KYC.
01:38And finally, the supervision.
01:41Who is meant to supervise the issuer, the stablecoins that are going to be on the market, and so on.
01:47It's all about reputation, isn't it?
01:49When you're trying to build confidence and trying to win people over, it's all about confidence.
01:55How do you improve confidence?
01:56Well, I feel like the model that Circle has implemented with USD Coin is a way to generate trust.
02:09In their case, they've been really transparent with how their reserves have been managed.
02:14They've published their reserves on their website.
02:17And they also have been auditing their reserves on a monthly basis.
02:21So, in order to generate trust and a good reputation, I think transparency is key.
02:28And the more information we users have about the company issuing the stablecoin,
02:33the better if we have access to who's the management team, the financial assets available.
02:40I think these sort of details may seem small, but they do generate a big difference when it comes to trust.
02:47What will it take for stablecoin to become completely mainstream?
02:53For sure, more adoption.
02:56And at this point, there are countries where we do not have any sort of regulations.
03:04And it's only trusted by users, by common knowledge or by getting into the crypto market.
03:11I feel like once there's certainty about regulations regarding stablecoins,
03:18larger companies will feel more comfortable with their use.
03:22And for sure, you know, this will increase adoption on the long run.
03:25Carlos, good to see you.
03:26And thanks for your time.
03:27Carlos Eduardo Bernos Amoros from Cornell University's Emerging Markets Institute.
