Leaders in Congress have promised to usher in a “golden age” for cryptocurrency. They’re kicking off this new era with bills to regulate stablecoins.

Stablecoins, theoretically, hold a steadier value than other cryptocurrencies, because they’re pegged to traditional assets — usually, the U.S. dollar. They tend to be less controversial than their riskier counterparts, including memecoins such as $DOGE or $TRUMP or even bitcoin, which is why it made strategic sense for the industry to push legislators to start with them.

The Genius Act (it stands for Guiding and Establishing National Innovation for US Stablecoins) passed committee with bipartisan support in the Senate last month; a similar measure is expected to advance in the House of Representatives soon. The bills would create a legal framework to bring stablecoins into the mainstream financial system.

Stablecoins already have a market capitalization of more than $200 billion, with some analysts predicting a number in the trillions within a few years. They’re basing that guess partly on the likelihood that lawmakers grant the tokens legal status. Last year, stablecoins hit a transaction volume of $8.5 trillion in a single financial quarter — more than double the dollar amount in transactions that Visa managed during the same period.

But some cryptocurrencies that called themselves stablecoins have proved unstable in the past, and skeptics also worry that an explosion in popularity could lead to systemic risk. Plus, advocates hoping the public will soon use these assets in daily life have a bigger problem: Most Americans have no idea what stablecoins even are.

I invited Austin Campbell, professor at NYU’s Stern School of Business, CEO of stablecoin company WSPN USA, and one of the best communicators on crypto out there to talk through all this and more with me. Our conversation, edited for concision and clarity, is below.

Molly Roberts: What is a stablecoin, and does everybody agree on that definition?

Austin Campbell: I’m going to answer the second question first: Absolutely not.

I’ll give you two definitions for what a stablecoin is. The first one is the one that is used in the wild, which I think is incorrect. That definition is: a token that is intended to keep a stable price of one dollar. But if that’s the definition you choose, any token attempting to do this is swept in. Pause for about a few minutes and think about that.

MR: That would include coins that have been proved not to be stable in the past. Like Terra-Luna, the algorithmic stablecoin pair that suffered a $40 billion wipeout in 2022.

AC: Correct, or let me get even more aggressive. I’m going to take one dollar from you and buy 5x leverage call options with Tesla and throw them in a reserve and call that a stablecoin.........

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