John Wu, the president of Ava Lab, believes most crypto firms want regulation. He said this during an interview on November 1 while sharing his sentiments on the Treasury’s report on stablecoins and what it could mean for the entire crypto space.
In the interview, Wu noted that the biggest misnomer about the crypto space is that people believe digital asset firms and enthusiasts do not want regulation. According to him, the opposite is true, seeing as most crypto firms want sensible and appropriate regulation. Wu added that regulating centralized stablecoins like Tether (USDT/USD) and USD Coin (USDC/USD) is necessary.
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With the Biden administration highlighting risks such as loss of value, payment system issues, illicit finance, and fraud, Wu believes reining in stablecoins is key to ensuring people invest in such coins comfortably. He added that regulation would ensure investors have access to transparent records that show the assets backing stablecoins.
While he believes issuers of centralized stablecoins should be subject to similar regulations as banks, Wu does not recommend similar policies for decentralized stablecoins.
This is because their collateral is on-chain, a feature that allows anyone to look into their reserves. Wu added that the Federal Reserve should study such coins and understand them before trying to regulate them.
Calling on the US to implement friendly policies
Explaining why the crypto sector wants regulation, Wu said innovators are trying to avoid another China-like crackdown on crypto. However, he believes China’s loss is the world’s gain because the miners settled in other countries, with the US becoming the most preferred jurisdiction.
Wu added that although the crypto space wants regulation, it does not need unsensible policies that force innovation out of the US. Emphasizing the need to implement suitable policies, Wu said too much or inappropriate regulation would see the US lose crypto and blockchain developers to other jurisdictions with set rules and certainty.
He also pointed out that this is the first time in the cycle of cryptocurrencies for the industry to see real utility through decentralized finance (DeFi), non-fungible tokens (NFTs), and blockchain-powered gaming.
Commenting on whether the crypto market will continue growing at its current pace, Wu said the number of coins in the market would diminish over time. According to him, a range of tokens in the market either lack utility or are unsuitable from a business perspective.
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