Over the past year, the use of stablecoins has perhaps been the one use case for blockchain and crypto that has gained the most popularity.
Governments are looking at regulation for stablecoins already on the market, and some are even establishing guidelines for the future development of stablecoins. Many are also cooperating with crypto companies to develop their own Central Bank Digital Currencies.
Naturally, the attention centred around stablecoins has not gone unnoticed by the crypto community, and on the sidelines of the Token2049 conference this year, XREX and the Unitas foundation jointly organised the Stablecoin Summit, gathering experts from exchanges, startups, and research labs to discuss stablecoins.
A panel chaired by Richard Liu, Co-founder of Hama, discussed how to drive real world adoption of stablecoins in Asia to a packed audience at the Raffles Hotel. Other panellists included Hassan Ahmed, Country Director for Singapore at Coinbase, Nadiem Sissouno, Head of Economics at Mento Labs, Neil Sheppard, Head of Derivatives at Gemini, and Irene Wu, Head of Strategy at LayerZero Labs.
Why are stablecoins seeing high adoption in Asia?
According to a Chainalysis’ crypto adoption index, Asian countries rank amongst the highest for crypto adoption. Experts during the panel discussion offered some insight as to why this was the case.
Ahmed noted that as stablecoins provide real utility for many in the emerging economies who do not have a local currency that can act as a reliable store of value. As such, people in these economies turn to stablecoins to transact, store wealth, and more.
Sissuono also pointed out that while stablecoins themselves do provide utility, the act of helping people exchange fiat currency for stablecoins or crypto is not necessarily a value-adding action in itself. Rather, the on-chain economies such as metaverses must also be able to attract people to transact before people will really begin to really move into the Web3 economy permanently.
In this sense, stablecoins act as a bridge between the Web2 and Web3 world. However, Sheppard also pointed out that in more developed economies, the impetus to adopt stablecoins and crypto may not be so strong, and part of that has to do with the inefficiencies that are still present in the crypto world.
“Traditional Finance still works fine- there are inefficiencies there but people understand it and are comfortable with the inefficiencies that it has. At the same time, people who work in the crypto space are also comfortable with the inefficiencies that are present here.
The question really is how to bridge these communities, and stablecoins can help both communities. It’s a good on ramp for people in trad-fi who are not always comfortable with crypto’s volatility.”
These inefficiencies within the crypto space, however, can be rectified- and when they are, the panellists are confident that stablecoins will be critical in enabling blockchain payments.
Wu argued that rather than considering stablecoins as a product in itself, we should consider them as infrastructure pieces whose reach needs to be expanded.
“Right now, if you want to use stablecoins on anything other their native chains, you probably have to go through wrapped bridges. This creates friction for the end user, and its a reason why adoption is not as fast as it could be. If we compare crypto payments against trad-fi payments, with how seamless and frictionless it is for people to buy things using Visa or Mastercard or any other trusted banking or payment institution, there is a clear winner. So we really have to make stablecoins and their related transactions seamless.
There’s already people who are willing to use crypto and stablecoins to buy things in the metaverse, so settlements there will be useful. But before we get there, this is the issue to deal with.”
The endgame, for the panellists, was not only for economic changes, but also to create a change of mind for everyone, including regulators and consumers.
In concluding his answers, Sheppard summarised his hope for the future: “We use e-money all the time instead of paper money, and we don’t think about it. To us, it’s all money, and I hope that in the future, stablecoins won’t be counted separately from these categories of money.”