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Boris Bohrer-Belevitzky, the CEO of Concordium, warns that excessive reliance on the dollar could destabilize the system, emphasizing the need to diversify currencies. He expects stablecoins to play a key role in payment financing (PayFi), providing instant settlements, lower fees, and ease of programming.
Focusing stablecoins around a single currency poses risks
Dollar-linked currencies have overwhelmingly dominated the stablecoin market, reflecting the global financial system's dependence on it. However, while stablecoins serve as a critical bridge between traditional finance and cryptocurrencies, some analysts argue that this heavy focus on a single fiat currency carries risks, especially if regulatory or macroeconomic factors impact the dollar's stability.
Chinese economist Chang Ming recently expressed these concerns, citing the use of dollar-linked stablecoins in decentralized finance (DeFi) as an example of how these currencies bolster the dollar's dominance. To counter this, Ming urged the Chinese government to issue its own stablecoin, in addition to expanding the use of the digital yuan on e-commerce platforms.
Boris Bohrer-Belevitzky, CEO of Concordium, agrees with Ming, seeing that the current dominance of dollar-backed stablecoins reflects the broader financial system. He warns of dire consequences if the sector does not reduce its reliance on the dollar.
Bohrer-Belevitzky told Bitcoin.com News: "If the vast majority of stablecoins are tied to a single fiat currency, any regulatory or macroeconomic disruption affecting the dollar could ripple through the entire market."
While calls for an alternative reserve currency have increased over the years, the U.S. dollar still sits atop global finance, being the world's primary reserve currency and standard for international trade. This dominance naturally extends to cryptocurrencies, where dollar-backed stablecoins like USDT, USDC, and previously BUSD have maintained a strong market cap dominance.
Despite the dominance of the U.S. dollar, Bohrer-Belevitzky believes that the future of stablecoins should embrace multi-currency diversity. He points to the increasing presence of non-dollar stablecoins, including EURC and EURS (euro-backed stablecoins), as well as Swiss franc-backed options like DCHF and XCHF.
Meanwhile, in addition to being exposed to risks associated with reliance on the U.S. dollar, stablecoins also face sector-specific risks such as decoupling. As evidenced by the decoupling of the foreign exchange pair against the U.S. dollar (FUSD), the stablecoin market is no less volatile than the rest of the cryptocurrency market. Bohrer-Belevitzky stated that this incident, however brief, highlights how quickly trust can erode in the stablecoin market.
"The decoupling event, driven by influential figures like Justin Sun, highlights how quickly trust can break down in a system that is still built as much on perception as it is on technical design," he says.
Bohrer-Belevitzky: Many blockchain projects treat compliance as a secondary issue
Despite being predictable, stablecoins rely heavily on user trust, and according to Bohrer-Belevitzky, this particularly applies in the post-LUNA/UST era, where investors have become "fully aware of any signals that reflect systemic weaknesses". After peaking at around $18.6 billion in market value in early May 2022, making it the third-largest stablecoin at the time, UST collapsed shortly thereafter.
According to the CEO of Concordium, the collapse of UST showed that a large market share alone does not equate to stability. He said:
The size of the operation does not guarantee stability. Transparency, consistency, credibility, and accountability are not optional; they are the foundation of long-term trust.
Meanwhile, the CEO of Concordium stated that he sees payment financing (PayFi), an emerging concept in the cryptocurrency and blockchain space, as the inevitable update to financial connectivity. He believes that blockchain-based stablecoins address key issues of traditional cross-border payments through near-instant settlement, lower fees, and 24/7 availability. Although not an immediate alternative, the CEO insists that stablecoins hold great potential for PayFi due to their programmability.
Bohar Belevitzky also shared some thoughts on what it takes to build a compliant blockchain and the challenges that come with it.
The CEO of the company explained: "I believe the biggest challenge is designing a system that meets regulatory requirements and nuances without compromising the core Web3 principles related to user privacy."
It is claimed that most blockchain projects treat compliance as a secondary matter or outsource it to third parties, an approach he insists "will not be practical". In contrast, Concordium equips its identity layer with zero-knowledge proofs to enable verification through trusted service providers without compromising user safety. This enables Concordium's permissionless proof-of-stake blockchain to "balance anonymity and accountability".
The CEO also spoke about the challenge of ensuring that this compliance layer operates without compromising user privacy.
Bohrer-Belevitzky said: "Another challenge is ensuring that the compliance layer works smoothly across all use cases. That’s why our identity layer features a modular and standards-based design, making it easier to integrate with existing financial workflows, and adds features such as geolocation and age verification."
