Here’s How Proposed Stablecoin Regulations Could Play In Favor Of Bitcoin and XRP

Randi Zuckerberg Explores The Advantages Of Bitcoin And XRP

This week, Central banks got recommendations to heavily regulate, if not ban, stablecoins. The recommendations were outlined by the Financial Stability Board (FSB). This organization makes recommendations about financial systems to central banks and finance ministers of G20 member countries.

They recommended fiat pegged cryptocurrencies are heavily scrutinized, with their recommendations spanning from regulations to total ban.

The agency noted; 

“Authorities should have the ability to mitigate risks associated with or prohibit the use of certain or specific stablecoins in their jurisdictions where these do not meet the applicable regulatory, supervisory, and oversight requirements.”

The push to scrutinize stablecoins has hugely been viewed to be negative for the market. Stablecoins are heavily relied on by trading investors in times of volatility. But there is one way that Bitcoin could benefit as the Twitter crypto community has been sharing.

If there are heavy regulations on stablecoins, a majority in the crypto community believe that stablecoin holders will switch to Bitcoin.


Value Of $8 Billion For The Taking

The debate began with a question imposed by top analyst Mati Greenspan. He noted that there is around $8 Billion invested in stablecoins. With financial institutions breathing down the neck of stablecoins holders, most will be inclined to cash out and avoid stablecoins. So, where will the $8B, or a big chunk of it move to?

Most of those who engaged thought that Bitcoin could easily become the cryptocurrency of choice. But with Bitcoin, without the freedom to change to stablecoins when the market was volatile, the investors would have to convert to long term holders. Another scenario is a huge demand at first when investors switch to Bitcoin but a crash later when volatility plays out and investors can’t seek haven in stablecoins.

Another huge population stated that XRP would also be a favorite for stablecoins investors. It is unlikely that all traders throng Bitcoin and according to sentiments, XRP will be another favorite.

In the long term, scrutiny of stablecoins will negatively impact the market. However, it seems that in the short term, it could benefit Bitcoin and XRP.