Last month, I met two Lebanese women at a conference overseas. They were accompanying their businessmen husbands. We got talking and I found that they keep their money mostly abroad or in dollars and euros in cash at home. In 2019, the Lebanese government froze bank accounts, effectively locking over $93 billion of citizens’ money and making it inaccessible. Therefore, when I read that the US has given stablecoins a formal legal backbone, it seemed that a giant step has been taken in legitimising a particular form of crypto currencies that finally have a use case, especially for people in countries with unstable governments and those with hyper-inflation.

Let’s get the basics out of the way first. A cryptocurrency is a specific type of digital token that is designed to function as a medium of exchange or store of value using blockchain to record transactions. Bitcoin is the most well-known example.

Cryptocurrencies have two major problems. One, there is no underlying asset. Remember that a fiat currency has the promise of the government to honour the value as an underlying asset. Stocks have businesses and bonds have a loan contract as underlying assets with a value. But cryptocurrencies have no asset or promise that gives them value. Two, there are no rules of the game as these have been outside the regulatory gaze. This has encouraged all kinds of frauds to perpetuate. Over half the cryptocurrencies have failed since 2021, with billions of dollars........

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