Stablecoins must face ‘difficult questions’.
The FT reported on the BoE statement that stablecoins would be subject to stringent controls to underline the asset based currencies should be trustworthy.
The stablecoin market is led by dollar pegged coins, but recently a range of coins have been issued pegged to non-dollar values.
The BoE is in the process of considering issuing digital currency itself and this is a question of competitiveness in certain verticals using digital currency for payments. Stablecoins are privately issued and they are not regulated by the central banks. Therefore private companies are actually putting into the monetary system private currencies which are intended to replace central bank currencies.
It is clear the central banks are threatened by these moves. To make stablecoins simply illegal is very hard as the market is global, and laws vary widely. The stablecoins may not a particular place which is the basis of the coin as these coins by their nature are distributed.
This further oppens up the entire question of a new global stablecoin pegged to a basket of national coins which has been debated.