The Swiss national bank executive Thomas Moser hinted that regulators are starting to favor centralized stablecoins after the recent Terra collapse and said that the regulations could take time as the current ones wipe out the DeFi space so let’s read more today in our latest cryptocurrency news.
The Swiss National Bank deputy head Thomas Muser discussed the ongoing trends in the central bank’s digital currencies and regulations during the European Blockchain Convention. Talking about innovation and adoption of private stablecoins and about a CBDC launch, Moser added both can co-exist and said that the CBDC function will be basic, and private stablecoin issuers can add services that will meet customers’ demands and needs.
When asked about the recent Terra collapse, Moser said that the recent spiral crash of the Terra and decentralzied stablecoin UST can have a lasting impact on regulators. He added that regulators could also be forced to favor centralized stablecoins over the decentralized ones but not every stablecoin is like UST:
“My fear is that that, that people will throw all decentralized stable currency in the same kind of category, which is not true, you know, so there’s a danger. I think that regulation will favor centralized stablecoins.”
When asked about developments on the regulations front, Moser hinted that this can take time and cited the example of internet regulations from the 1990s where the regulators took time to come up with the new rules rather than implementing the existing telephone regulations. Moser said if current financial regulations are imposed in the industry, the Defi ecosystem will not exist anymore:
“if you just take the existing regulation and put it on crypto then defi will disappear. Because you will only have centralized entities that you can regulate with the current regulation. For DeFi, where there is no single entity to be held accountable for, which is really just small contracts interacting, you need a different type of regulation.”
The Swiss central bank is among the selected few that started the pilot for their national CBDC apart from China. The central bank carried out a wholesale CBDC testing in January and later the same month, SNB published a report based on the trials and suggested that the risks are higher than the benefits.