The New Normal and the Case for Stablecoins
Julien Le Goc, Director of Policy, Diem Association
Originally published in the GDF Annual Report 2020.
2020 was a seminal year for the world and for how essential technology is in keeping the gears of the global economy turning. In every aspect of our lives during an unprecedented global crisis, the role of technology for household, business, and governmental continuity has been essential. This is true in perhaps every aspect of our lives, with the one potential exception being the way we transfer value.
The case for the efficiency, reduced friction and user empowerment that is the promise of fintech was laid bare through the course of a tumultuous year — one in which governments grappled with how to get direct relief to their neediest citizens, while targeting economywide interventions to protect and preserve the engines of commerce amid a global lockdown.
In this environment, contactless payments, reduced costs and efficiency in the movement of value, without sacrificing trust and compliance, have proven essential. As COVID-19 continues to wreak havoc globally, the cautious optimism of vaccine mobilization should see a return to a “new normal.” There are, however, some items worth keeping as we reflect on a year of fintech innovation. The use of blockchain as a core building blocks of userdirected payment systems should be here to stay.
A key pillar of broadening the base of participation in these efforts is the growing wave of regulatory clarity for the treatment of these assets, and promoting responsible and principled innovation. Chief among these are efforts on both sides of the Atlantic and around the world to address the legal classification of digital assets, while at the same time delineating minimum expectations when it comes to combating illicit activities in the space.
Encouraging market developments suggests the era of cryptocurrencies is beginning to bridge the gap into the real economy. 2020 was the year this change became lasting. 2021 and beyond will mark the period these developments gain much needed regulatory clarity following a ‘same risk, same rules’ technology-neutral approach to oversight.