Are stablecoins key in fast-changing digital financial world?

The cryptocurrency market is facing increased pressure with soaring inflation and rising interest rates. Regulators worldwide are working out how to build guardrails that can protect investors and dampen risks to wider financial stability.

Joshua Jahani, lecturer at Cornell University, specializes in strategy, finance, and entrepreneurship with expertise in global capital markets. He is also a board advisor for an investment bank focused on cross-border transactions.

Jahani says:

“Most cryptocurrencies are only worth what people are willing to pay for it, which can be either very good or very bad for investors. People still seem to be fascinated with using crypto only to make a profit from its store of value rather than what it’s intended for, a simple electronic cash system. Most cryptocurrencies today are not financially stable, and people are using this as an advantage to make money fast, but at a high risk.

“Stablecoins, a type of cryptocurrency backed by real and tangible assets, can make more sense if we plan to move to a digital financial system that ensures a stable value in the market. There is still a lot to figure out about how to achieve stability in a fast-changing digital financial world.”