Stablecoins are assessed by the CEO of American Express as investment tools, not as fiat currency replacements.
Mr. Jinshi, CEO of American Express, asserts that stablecoins cannot replace fiat currency but are merely a type of investment asset in the cryptocurrency market.
MAIN CONTENT
Stablecoins are viewed as investment tools, not fiat currency.
The CEO of American Express expresses views on the role of stablecoins in the future of finance.
The concept of stablecoins does not completely replace the traditional monetary system.
What are stablecoins according to the CEO of American Express?
Mr. Jinshi, CEO of American Express, believes that stablecoins only play the role of investment tools and cannot replace fiat currencies like USD or EUR. This perspective is based on the price stability and liquidity of stablecoins compared to highly volatile cryptocurrencies.
Stablecoins are more like an investment security than an official currency. They cannot replace fiat money in daily transactions.
Jinshi, CEO of American Express, 18/07/2024
This assessment confirms that stablecoins only supplement the cryptocurrency ecosystem to mitigate price volatility risks but have not yet achieved the capacity to replace the role of fiat currency in the global economy.
Why can’t stablecoins replace fiat currency?
Mr. Jinshi bases his explanation of why stablecoins cannot replace fiat currency on legal, regulatory, and widespread recognition factors. Fiat currency is issued by central banks and backed by the government, while stablecoins typically link their value to fiat currency through secured assets.
Fiat currency plays a dominant role due to legal mechanisms and the reliability of the economy; stablecoins are merely investment or trading instruments within a limited scope.
Jinshi, CEO of American Express, 18/07/2024
Stablecoins can reduce volatility compared to other cryptocurrencies thanks to price peg mechanisms, but still lack the popularity and strong legal framework to replace fiat currency.
The current and future role of stablecoins in the financial market
Stablecoins are increasingly used in cryptocurrency transactions due to their ability to maintain stable value, helping to mitigate volatility risk. However, the primary role of stablecoins remains as an investment tool and a payment intermediary in DeFi and CeFi environments.
According to a 2023 report by Chainalysis, the trading volume of stablecoins has increased by over 50% compared to the previous year, reflecting the growing level of acceptance and use in the DeFi sector.
Is there a clear difference between stablecoins and fiat currency?
Stablecoins are designed to maintain a value close to fiat currency through reserve mechanisms or algorithms, but lack government backing and are not official payment means. Fiat currency has legal guarantees, is widely accepted, and serves as the foundation for the national economy.
Criteria Stablecoin Fiat Currency Issuer Private entity or decentralized organization National central bank Value backing Fiat currency or other secured assets Legal and government backing Acceptance Limited to the cryptocurrency and digital transaction space Official and widespread in the national economy Legal status Not synchronized, still developing Clear, well-regulated
Frequently Asked Questions
Can stablecoins replace fiat currency?
No, stablecoins are seen as investment tools, lacking the legal guarantees of fiat currency, according to the CEO of American Express.
How do stablecoins operate to maintain stable value?
Stablecoins maintain value close to fiat currency through asset reserves or supply-demand adjustment algorithms.
Who issues stablecoins?
Typically issued by private companies or decentralized organizations, not government agencies.
What is the main role of stablecoins in finance today?
It is an investment tool, a means of payment in the cryptocurrency and DeFi space.
Do stablecoins have legal risks?
Yes, due to the lack of a synchronized legal framework and being in a development stage.
Source: https://tintucbitcoin.com/ceo-amex-stablecoin-la-cong-cu-dau-tu/
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