FTX US President: Stablecoins Will Bounce Back after UST Debacle

UTC by Oluwapelumi Adejumo · 3 min read
FTX US President: Stablecoins Will Bounce Back after UST Debacle
Photo: Depositphotos

According to Harrison, Terra’s issue points to the role of exchanges in investor protection such as screening out assets that appear illegitimate or lack transparency and long-term value. 

FTX US president Brett Harrison believes that the growing demand for stablecoins will help the fiat-backed stablecoin survive Terra’s collapse.

Speaking during an interview at the World Economic Forum in Davos, Harrison attested to the many teams focused on designing and developing new infrastructure and structuring new projects. In his opinion, there’s going to be a lot of that investment coming back in due time.

On the issue of the Terra and LUNA’s crash, Harrison opined that exchanges are serving as gatekeepers for crypto assets that bear no promise.

He also spoke about the level of competition posed by traditional exchanges like the New York Stock Exchange. Per the FTX executive, stablecoins and wholesomely, the crypto industry would maintain their demand.

“The word ‘stablecoin’ issued in a lot of different contexts to mean different things”, said Harrison contesting that the UST was not a stablecoin at all, but was a form of auto-rebalancing product, structured and backed by a volatile asset to become a subsidized peg.

According to Harrison, Terra’s stablecoin collapsed because of its level of volatility, giving it much of a run.  Comparing the UST to the USDC, the FTX president insisted that fiat-backed stablecoins make the foundational element for both decentralized and centralized finance. This, according to Harrison is what makes the USDC superior.

The Role of Exchanges in Protecting Investors

Undoubtedly, crypto exchanges house several digital assets with different volatility levels and this makes risk disclosure a must.

According to Harrison, Terra’s issue points to the role of exchanges in investor protection such as screening out assets that appear illegitimate or lack transparency and long-term value.

Harrison supports the idea of a regulation mechanism for stablecoins as a means to ensure that for one to qualify as a stablecoin, they should meet certain criteria and not be a risky asset.

On the same note, Harrison added that members of Congress have already proposed certain bills to better regulate the industry.

Harrison added that more clarity from US market regulators would be a valuable addition for the industry to understand what kind of assets can be listed by the exchanges.

On FTX’s recent application for a Commodity Futures Trading Commission (CFTC) license for margin and clearinghouse purposes, Harrison disclosed that the exchange was not afraid of the competition offered by traditional exchanges, while also recognizing the competition from new entrants in the space.

FTX is one of the largest crypto exchanges in the world and it recently became the second-largest centralized cryptocurrency exchange in terms of market share beating competition from Coinbase and others.

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Oluwapelumi Adejumo

Oluwapelumi is a believer in the transformative power Bitcoin and Blockchain industry holds. He is interested in sharing knowledge and ideas. When he is not writing, he is looking to meet new people and trying out new things.

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