With US banks having to make sense of a new set of crypto rules, Stellar is in a position to put some distance between itself and the competition. Its particular makeup is what makes it an attractive option as these regulations are put in place.
Regulatory Changes Open the Doors for Crypto in US Banking
The way the financial industry is approaching digital assets has been upended by the latest changes in US banking law. As was made clear on the most recent Cheeky Crypto, there is less red tape for banks wanting to work with cryptocurrencies. A case in point is the Federal Reserve’s decision to no longer factor in reputational risk during its reviews; that was once enough to put off any foray into stablecoins. Now, there is room to be more inventive with digital assets and not have to look over one’s shoulder for trouble from regulators or the press.
That liberty, of course, means a bank has to be more hands-on. The onus is on them to ensure that the crypto infrastructure they put in place is up to standard. Where there used to be a hard line, the focus is now on due diligence and managing risk, which means a closer look at the technology before it is brought in-house.
Stablecoins Gain Legitimacy Amid Clearer Guidelines
Cheeky Crypto also points to the firmer legal footing that stablecoins have been given. The new rules mean issuers are held to a standard of transparency and must be in good standing with regulators. In doing so, some of the old questions over how these instruments are policed and whether they are up to standard are put to rest, making it easier for banks to see the value in adding them to their operations.
With that kind of clarity, there is an opening for the likes of major financial institutions to get involved with stablecoins. It is only a matter of time before this drives demand for blockchain infrastructure that can stand up to scrutiny.
Why Stellar Gains Ground Over Competing Networks
In today’s regulatory environment, Stellar has a distinct edge. The setup is what makes it so useful: asset issuers, whether a bank or a stablecoin provider, can have control over the assets they issue, yet make use of an open, transparent network for settlement. For any institution that has to deal with new compliance rules, this is a draw. It gives them the room to operate while also addressing the kind of issues regulators want to see covered when it comes to recovery and the like.
There are other options on the table, from Ethereum to some of the more closed-off private chains. But Stellar provides answers to the hard questions on risk and resilience that are top of mind for oversight bodies. It is in a good spot to make the most of the shifting regulatory landscape, even if being the top dog is not a sure thing.
Potential Impact: What Comes Next for Banks and Crypto?
Now that the rules are more transparent and some of the red tape has been cut, it is only a matter of time before US banks put more energy into digital assets. They will be on the lookout for the kind of infrastructure that can deliver on innovation without sidestepping compliance. There is a case to be made, as Cheeky Crypto has pointed out, that Stellar’s makeup is well suited to what an institution in need of a workable, compliant option would want.
In the end, the way things are being regulated is opening up a fresh chapter for crypto in the banking world. For the banks trying to make their way through all of this, a network like Stellar is in a good position to come out on top, given how it handles the dual demands of running a business and staying on the right side of the law.
Source — Cheeky Crypto: https://www.youtube.com/watch?v=jxz49zIWq7c
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