For many, an issue with cryptocurrency is the intense volatility that persists. For example, the prices of Bitcoin hit a record high on October 20th before dropping over $6,000 in value per coin. Because of this volatility, it is not helpful for everyday use and makes some wary about their investments being tied to such a volatile asset. However, there is an alternative; the stable coin.
Unlike cryptocurrencies like Bitcoin, stable coins are stabilized by being backed by the US dollar or a commodity like gold. This price stability is a feature many cryptocurrencies lack. Stable coins are, therefore, more suitable for everyday use or even applications like issuing securities through Regulation A+ exemptions.
RegA+ is highly protected by compliance actives, broker-dealers, the SEC, filings, etc. The uncertainty behind a stable coin for RegA+ goes away because there is transparency and allows people to transact more efficiently with these assets. When it comes to RegA+ and stable coins, the security is pegged to a stable coin created with a smart contract to ensure stability from a technology perspective. With stable coins, especially those received when investing in a company, shareholders can use them in secondary market transactions that are FINRA-registered and fully compliant with securities regulations.
Still, stable coins are largely in their infancy. There will continue to be developments as to what types of assets or currency they are backed by. Because it is stable, it will have a far more practical use when compared to other cryptocurrencies. However, the main thing is that the infrastructure and engineering for stable coins already exists; it’s more of a matter of how quickly their use grows.