Charles Hoskinson says that Cardano may offer a stablecoin that provides the same privacy as cash.
Speaking on eToro’s “Conversations with Leaders” podcast on May 9, the Cardano co-founder proposed privacy-preserving stablecoins as a new frontier for the crypto industry.
“Maybe people don’t want to have a stablecoin where every time they buy something it’s forever tracked by everyone everywhere,” Hoskinson said.
Stablecoins are a $243 billion crypto market. While being privately issued tokens, stablecoin transactions can be tracked on the public blockchains where they are deployed, like Ethereum and Solana.
Cardano also has stablecoins deployed on its blockchain with a total market size of $31.5 million. Hoskinson says the team is already mulling the idea of being the first ecosystem to create a privacy stablecoin.
Regulators don’t like privacy coins
The proposal comes as privacy coins face an existential threat.
Privacy has been a core crypto ideal for almost two decades, but that hasn’t prevented privacy-enabling cryptocurrencies like Monero and Zcash from getting delisted and banned from exchanges due to concerns over them being used by criminals.
The European Union is even set to ban exchanges and custodians from dealing in privacy cryptocurrencies from July 2027.
Still, Hoskinson says there’s a way to offer privacy without sacrificing compliance.
For instance, the stablecoin could have selective disclosure to provide the anti-money laundering and anti-terrorism funding provisions regulators want, he says.
Selective disclosures might not work.
Privacy coin projects like Firo and Zcash have tried to modify their protocols to provide some form of selective disclosure. They’ve done so by creating “whitelisted addresses” for users that exchanges can verify for transactions while still allowing users to maintain shielded transaction capabilities.
Regulators haven’t been swayed by those moves, and in the absence of support by major exchanges, liquidity for those tokens has declined.
With major markets like the US and Europe moving towards some form of regulatory clarity for cryptocurrencies, stablecoins, even in their current vanilla form, are under the microscope.
In the US, the Genius Act, a stablecoin bill, failed to pass a Senate vote last week as Democrats alleged the legislation endangered consumers and the financial system.
Osato Avan-Nomayo is our Nigeria-based DeFi correspondent. He covers DeFi and tech. Got a tip? Please contact him at [email protected].
