While the bitcoin community seems fully absorbed by the daily ups and ATHs of bitcoin, it seems that most people have missed what might well be the biggest and most impactful news of the year 2021 for the crypto sector.
Yesterday´s BIG news was that the US bank regulator OCC issued an opinion letter in which it allows US banks to use blockchain infrastructure and stablecoins.
I posted this yesterday but it seems that — with a few exceptions — the crypto community did not fully register the importance of such an event. This is not simply important, it is HUGE. It is like banks saying “OK we´ve criticized bitcoin and the crypto sector for 10 years until yesterday…but sorry we were wrong, now we like it and we will start using your infrastructure and even crypto assets like bitcoin and USDC, USDT for our payments”. BINGO.
Now, I wanted to add some more food for thoughts on that topic.
This is a very smart shortcut taken by the US regulator to legitimize the use of crypto dollars and counter the Chinese DCEP. Basically, while the DCEP is up and running and everyone else still ponders how to issue CBDCs, the US said “digital dollars in the form of stablecoins already exist, US banks can use them”. At a time in which the world economies are coming to terms with the problems created by the dollar hegemony and its weaponization for geopolitical reasons, this move will strengthen again the dollar hegemony on the world economy, but in a much more positive way. I mean, geopolitically, I see as a net positive the fact that the US move makes SWIFT practically obsolete and, while projecting the use of the crypto dollar as a global instrument in the digital world, it reduces also the ability of the US to use it as a weapon for its geopolitical agenda. And this is no doubt positive for the world. Let´s see how this goes down with the US establishment in the future.
But there are also additional important aspects that we will have to consider in the next few weeks and months to fully appreciate the implications of this very important decision:
(i) how will this impact on Fintech projects?
(ii) this allows US banks to offer additional services to their customers such as buy and custody bitcoin and other crypto assets, as well as to make loans while using crypto as collateral. It suddenly opens the door to instant crypto mass adoption and the onboarding of the legacy banking sector and their clients.
(iii) US banks can now run crypto nodes and even mine cryptos.
(iv) US Banks can now issue stablecoins. Therefore expect to see soon the Goldman or the JPM crypto dollar, the USD-GS or USD-JPM.
(v) possibly this might positively impact on the liquidity and lower the chronic dollar shortage of the Eurodollar inter-bank market
(vi) a dollar CBDC becomes then redundant?
(vii) adoption by banks can be scaled up massively by using the Bitcoin and Ethereum protocols which support the existing stablecoins without the need to build up any new infrastructure or specific wallets. All the work has been done the banks just have to plug in. The same goes for the banks´ own stablecoins, which can be up and running in matter of months. Banks will also benefit from the safety, security, resiliency, speed and low cost of transacting using such protocols. Very convenient, easy and very, very smart.
(viii) until yesterday Bitcoin was a parallel financial system. Tomorrow it will be the primary one, the backbone of the new financial digital system upon which everything could be built. Ray Dalio should have listened some time ago.
(ix) last but not least, with this move commercial banks position themselves one step ahead of the FED in its decision regarding the CBDC. Basically, banks consolidate their role as service providers and intermediaries also in the new digital-crypto world. This means that, should the US launch in the future its own CBDC and decide to drop helicopter-money stimulus directly to its citizens, this will be done by commercial banks crediting the citizens´ wallets rather than directly by the FED.
If the dollar wants to win the digital race and remain the reserve currency in the future, the only way to achieve that is to beat its competitors, the Chinese DCEP and the Euro.
At a time in which Europe is tragically slipping towards a dystopian reality — made of totalitarian controls, restrictions of constitutional liberties, ubiquitous surveillance, destructive lockdowns and soon to come expropriation of private properties via unsustainable taxation levels, implemented by a malignant gang of incompetent and corrupted bureaucrats/politicians serving an oligarchic elite of billionaire monopolists/rentiers and megalomanic “resetters” — the US$ can easily consolidate its primacy by offering the free people of the world a crypto-dollar without the surveillance tools that the Chinese have built into their DCEP or the EU elites wish for the Euro.
This will ensure that the US$ will remain the king of fiat-crypto, along with bitcoin the king of crypto. This first step, is an important one in the right direction.
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