Tyler Cowen: evaluation

Transcript context

…What my hope is and what often happens is . . . First of all, I’m not expert on every aspect of the proposed stablecoin bill, but there are reciprocation requirements. If other countries want to access them and participate in our financial services and KYC and AML, they’re expected to have similar rules that, historically, our financial services regulations tend to propagate to a lot of other countries. My hope would be that the US does something here, and a lot of other countries follow that lead, and that becomes the norm, and that people want, and there’ll be rules. You can’t call something a stablecoin and get it on a registered exchange if it’s not. That would be my hope. Look, in crypto, there’s no question there are scams, and there are bad things, and I’m sure there will be in the future. I think that the best solution to it is to have smart regulation that incentivizes or requires things to be built in the proper way, in a way that avoids things like bank runs. By the way, the bank run thing — just to be clear, there were a bunch of stablecoins in the past, like Terra Luna, which had a bank run and collapsed. That was not asset-backed by dollars. That was this circular thing that was backed by its own token, and it had a bank-run thing. That has happened, as you say. The hope would be that these existing ones and the new ones and the regulations around them would require full one-to-one asset backed, and therefore make bank runs impossible. Circa 2025, we’ve seen a lot of international cooperation break down. The WTO basically doesn’t work. The UN, I would say, has not worked in some while. Intellectual property law — that still works. Agreements on trying to end various wars — those are not working. So, it seems unlikely to me that the US could convince the world, in essence, to copy our stablecoin regulation, even if we tried to use SWIFT. We’ve pushed the SWIFT incentive on countries very hard. It’s shown its limits. Again, why don’t we just end up with these significant corners where the most profitable stablecoins are outside of what the US wants to do with them? I think it’s partly also, what do you want to do with the stablecoin? Who’s using the stablecoin? I’ll just give you an example. The Stripe founders — I think of Stripe as a very smart financial services firm and who, by the way, were not particularly . . . they had done crypto 10 years ago, and then had really soured on it. I think you know Patrick and John pretty well.…

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