A Whitepaper Is Published On The Importance Of Stablecoins by a Gemini Trust Executive
Stablecoins have a great importance in the digital asset market. However, many people have little or no knowledge regarding these assets.
This is one of the reasons why many individuals end up making loses while trading them. Others do not even have any interest in this industry because of a lack of adequate information.
Sarah Olsen, who is the head of business development at Gemini, printed a three page white paper about stablecoins. The expert wanted individuals to have a clear understanding on the topic and to know the risks involved in this trade. The paper was easy to understand since it was a summary on the subject of stablecurrencies.
Gemini attracted public attention in September when the corporation introduced their own dollar-linked coin known as GUSD. This was a stablecoin pegged at a ratio of 1:1 with the American dollar.
Stablecoins Bridge The Gap
Olsen contends in the whitepaper that the larger digital market is undeveloped as it experiences frequent volatility. The expert laments the difficulties in exchanging cryptocurrency to fiat. This occurs because banks work during normal hours only. Therefore, people cannot transact during off hours if they are using traditional currency.
Olsen explains that stablecoins reduce the problems that exist in the traditional banking system. The Gemini currency enables fiat to move at the same pace as the cryptocurrency. She further admits that some stablecoins have not performed well on the transparency front.
Olsen named Tether as one of the currencies that have failed the transparency test. This has made many potential investors lose confidence in the digital money business. Additionally, other firms that trade in these assets do so without proper permits.
She is concerned about the issue because such a trend is dangerous for the market. It creates a dilemma in this industry in case of insolvency.
Monitoring And Oversight
Olsen suggests that both institutions and stablecoin issuers should underwrite the counter party risk. Moreover, the issuers should be examined on fundamental stable assets. They should also be audited to ensure that the client’s resources are safe. Therefore, the market watchdogs should monitor the activities of these entities to eliminate fraud in this business.
Olsen observes that digital money with steady value will attract more investors to this market. It is because they will earn better returns from their investments. The market regulator should cancel the licenses of those entities that breach the set regulations. The measure will decrease conflicts between the stablecoin issuers, banks and customers in future.