Chance Barnett is chairman of Jewel, a proposed Bermudian bank providing digital asset banking infrastructure to global businesses. He previously founded Crowdfunder, an equity crowdfunding investment platform. Michael Dowling is chief technology officer at Jewel and was the chief technology officer at IBM in its Blockchain Financial Services Group.
The U.S. dollar-backed stablecoin market has grown nearly 100% since January, jumping from roughly $5.5 billion in January to more than $11 billion in June (). But with demand for USD fiat-backed stablecoins experiencing tremendous growth, we think it will soon become clear that not all stablecoins are created equal and not all USD vehicles play the same role in pushing the industry forward.
Now, what’s this about wildcats? Well, many of the stablecoins of today lack standards and are fairly opaque surrounding what stablecoin holders are actually holding. Stablecoins differ greatly across their reserve backing, who they’re issued by, how they are redeemable, what their underlying legal and business structures and which blockchains they’re issued on. Even the anti-money laundering (AML) and know your customer (KYC) requirements some stablecoins operate under differ.
This creates an environment similar to the “Wildcat Banking” era in the U.S. in the 1800s, also called the “Free Banking” era.