Circle IPO puts spotlight on regulated stablecoins

00:00 Speaker A

Let’s talk about stable coins. It’s a growing corner of crypto drawing attention from both regulators and investors. Unlike Bitcoin, with its volatile swings in either direction, stable coins designed to do one thing: keep their value stable. This can be achieved by being backed by reserve assets. Many are pegged one to one to the US dollar, acting like a digital version of cash that lives on the blockchain. That’s good to know on a day like today because stablecoin issuer Circle filed to take the company public with a 6.7 billion dollar valuation. And for more, we’re bringing in now Ben McMillan, chief investment officer at IDX Advisors from his more than 97 million dollars in assets under management. Ben, always good to see you. So, kind of it’s a stablecoin moment, Ben. We got the Circle news we just discussed, uh, have the Senate, uh, advancing legislation to regulate stablecoins, Ben. What do you make of it all?

02:01 Ben McMillan

Yeah, I mean, you kind of hit two important nails in the head. The first of which is the regulatory landscape. So if you go back to, you know, kind of the previous administration, who everybody knew is no real friend of crypto, but in particular stable coins really suffered. And like you said at the at the beginning of the segment, you know, stable coins are important because this is the on-ramp for Main Street to get into crypto. A lot of people don’t necessarily want the volatility of crypto, but they like the idea of making payments in Bitcoin, for example, or you know, just generally having a store of value that’s not as volatile as something like a Bitcoin. And so stable coins is huge. I think JP Morgan actually put out a piece fairly recently that said they expect the the stable coin market to grow from roughly 2 and a half billion currently to over 500 billion in the next decade. So again, I mean this is, this is a big deal. Um, and one of the biggest things I think is is now we have a much more, uh, clear and friendly regulatory guidance, um, you know, not just for stable coins, but crypto in general.

04:07 Speaker A

So Ben, it it’s outright here. Now, I think we should probably do the, do the, take our, uh, eat our broccoli. You know, just contrast the stable coin, what am I getting versus a Bitcoin in terms of that, uh, uh, store of value, what’s right for different people, and then maybe tie it in with how this IPO fits in.

04:48 Ben McMillan

Yeah, so stable coins are crucial because, you know, like we were just saying at the top of the segment, you know, they’re generally backed, or they’re backed by, you know, US dollar or some, uh, you know, definitive store of value. Now this is an important, this raises important consideration as it relates to Circle specifically because Circle is US based, US domiciled, and US regulated. If you look at the, you know, biggest player in the stable coin market, that’s Tether. And in recent years, there’s been a lot of concerns about what exactly is backing a Tether, uh, what’s, you know, what is in their treasury? They’ve had audits, there’s been, you know, back and forths. And so when you look at, you know, broad swaths of Americans, including institutional players like banks, the fact that Circle, which by the way has always done a good job in my opinion of touting transparency and, and you know, really opening up the books in terms of what is a USDC, that’s the name of their stable coin, what is that backed by? And in this coin is in case, it’s just, you know, plain Jane, you know, simple US dollars. So again, it’s it’s gives people a lot of comfort if they like the idea of potentially utilizing crypto, but they don’t want the daily fluctuations of a Bitcoin, or an Ethereum, or something that is not backed by, you know, fiat currency, a stable coin is is US regulated stable coin is a great option.