The challenges and opportunities for stablecoins in traditional finance with Paxos’ Mike Coscetta

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The following excerpts were edited for clarity.

Plotting where we are in the cycle

At a very high level, we are still extremely early. It’s a new market in many ways. I think people are learning not only what the infrastructure has to be to power this market, but what the assets within the market have to be, and the use cases for them. As you think about these things, the consumer changes, businesses change, regulations change, macro events happen and could be catalysts or could be hindrances to the expansion and development of these markets. 

So in a nine inning baseball game, we’re probably in the second inning. I think we’re still getting our players adjusted and aligned. We’re still trying to figure out the game we’re playing, because the field is changing, the size of the field is changing, the shape of the field is changing. I think that makes it incredibly fascinating and interesting. At the same time, it could be terrifying. And for a business or a person who’s been in this space for decades, this could be really vertiginous and drive you a little mad, trying to figure out what the game is we’re trying to play. 

Hurdles to adoption

Games tend to have pretty clear dimensions of the shape and size of the playing field. And they tend to have a very clear set of rules. So, here,  it’s a place where I think regulation is not only inevitable, but I actually think it’s really desired. I think regulation gives clarity. I think regulation in many cases gives people the opportunity to showcase trust, stability, certainty – things that people typically want associated with money. When money loses stability, certainty and trust, you tend to see a lot of inefficiencies and a lot of problematic things that start to happen in the world. So I would say we need a clear set of rules. 

For companies exploring the space and thinking about what is possible, identify short term opportunities, what are quick wins, what are quick opportunities that can be solved and fulfilled using new technology, whether it’s blockchain broadly, whether it’s cryptocurrency, very specifically, whether it’s a stablecoin – to do things that the company has always envisioned doing. So I think curiosity and creativity are also needed right now, because this is a new era. There are possibilities here that maybe no one ever thought were possible, but with blockchain, they truly become not only possible, but probably also inevitable.

Creativity within an evolving regulatory environment