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Some Quick Thoughts on a Fed Note
The Federal Reserve Bank of NY recently published a FEDS Notes piece on stablecoins. First, I would encourage readers to have a closer look at this, as the Federal Reserve has a number of (quite talented) researchers and policy folks looking closely at the stablecoin space.
Second, I wanted to provide some brief commentary on this as we continue to debate the stablecoin landscape, primarily wearing my long-time crypto participant and much longer time traditional financial markets participant hat so we don’t speak past each other on the discourse.
Thus, please consider me to be speaking in my personal capacity and not in any professional capacity here.
Stablecoin Taxonomy
I would suggest that the divison of on-chain collateral vs. off-chain collateral is not granular enough to properly analyze the stablecoin space. In reality, “stablecoin” is used as a very broad catch-all encompassing many types of instruments, and as a finance person, the arrangements are broad enough that “stablecoin” is now about as specific as saying “bond”, which is to say we’re going to need a lot more detail to have a meaningful conversation.
To that end, I would suggest the following taxonomy for stablecoins as one granular enough to work:
- Regulated real-world…
