Investment banker David Lubin has explained for Chatham House that stablecoins present many risks, but they are welcome—if they help to force “autocratic nations” to open up to free capital flows.
Data from the blockchain platform Chainalysis show that “(of) the ten countries where crypto activity is greatest, only one—the U.S.—isn’t an emerging economy. India, Nigeria and Indonesia make up the top three.” The reason is simple: It allows faster remittances, but also favors capital flight. For instance, 20% of Nigerians are reported to have their money in stablecoins. That allows them to outflank capital controls and convert their money in U.S. dollars, which is likely to be more stable than a local currency.
Bad? Stablecoins are a threat to national sovereignty, especially when they are used to move illicit funds. But “stablecoins’ role in allowing money to vote with its feet when governments misgovern is worth taking seriously. … especially when the main purpose of capital controls is to shore up autocratic governments.
