Swiss National Bank exec: Regulators may favor centralized stablecoins after Terra crisis


SNB Vice President Thomas Moser spoke to Cointelegraph Editor Aaron Wood and discussed the ongoing trends in central bank digital currencies (CBDCs), stablecoins, and regulations during the recently concluded European Blockchain Agreement.

Moser spoke about the innovation and adoption of private stablecoins and central bank plans to launch central bank coins, saying that both can coexist. He said that the functionality of digital central bank coins would be very basic and that private issuers of stablecoins could add services on top of it to cater to retail customers.

When asked about the recent collapse of Terra’s TerraUSD (UST) and its subsequent impact on regulations, Moser said it could have a lasting impact on regulators.

He added that regulators may be forced to favor centralized stablecoins over decentralized ones, even though not every stablecoin is as decentralized as terrestrial treasuries. He said:

“My fear is […] that people will throw all decentralized stablecoins into the same type of denomination, which is not true, you know, so there is a risk. I think regulation will favor centralized stablecoins.”
When asked about developments on the regulations front, Moser hinted that it could take some time. He cited the example of Internet regulations from the 1990s, where regulators took the time to come up with new rules rather than implement existing telephone regulations.

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Moser said that if the current financial regulations in the crypto industry were implemented, the decentralized finance (DeFi) ecosystem would cease to exist. It is to explain:

“If you take the current regulations and put them on encryption, DeFi will disappear because you will only have central entities that you can regulate through the existing regulations. For DeFi, where there is not a single entity that can be held accountable, and it is really just smart contracts that interact, you need a different kind of Organization “.
The Swiss central bank is among a select few countries that have begun experimenting with their own national central bank coins and implemented a bulk test of central bank digital coins in January. Later that month, the Swiss National Bank published a report based on its experiences and indicated that the risks outweighed the benefits.



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