Stablecoin Geopolitics

Austin Campbell
7 min readJan 5
Photo by Kyle Glenn on Unsplash

At the risk of controversy, I want to address an issue I have been thinking about, and one that I think is particularly poorly understood in the United States political arena. Why? Because I think it’s important that someone bluntly state the truth.

The trigger for my writing this article was this statement from the federal banking regulators in the United States (Fed, OCC, FDIC, collectively). Specifically, this part:

“Based on the agencies’ current understanding and experience to date, the agencies believe that issuing or holding as principal crypto-assets that are issued, stored, or transferred on an open, public, and/or decentralized network, or similar system is highly likely to be inconsistent with safe and sound banking practices.”

This is a statement that crypto cannot be allowed into the banking system, full stop, in any public way. Granted, I don’t actually think it’s much different than the current views of regulators, and I think it rests upon a combination of incorrect assumptions but also the completely bonkers and awful conduct around risk management of ~95%+ of crypto firms, so I understand where the regulators are coming from here. Put differently: if crypto had a very strong culture of risk management, I think they might be saying something different, and changing this view will take some crypto firms interacting with the banking system in more risk-aware ways.

With that said, I think the regulators’ viewpoint here also sets up a giant time bomb for the US economy.

So now, the hot take, and let me start by saying I genuinely hope regulators and policymakers listen and think deeply about this, rather than brushing it aside, as I write from the perspective of a cranky, risk-obsessed, unpleasantly prickly fixed income person, not some sort of crypto degen shitcoin YOLO type (for which I have no tolerance and a nose for sniffing out). References can be provided upon request to confirm this.

In the medium-term future, either there must be US dollar stablecoins issued on a public blockchain, able to interact with the regulated banking system, or the dollar will no longer be the global reserve currency

Austin Campbell

Austin is a Columbia Business School professor, has run one of the top 3 stablecoins, and has decades of experience trading profoundly weird financial stuff