Paxos CEO Charles Cascarilla believes that stablecoins need solid regulation to go beyond being just a tool for crypto enthusiasts and achieving mainstream adoption.
Speaking to Bloomberg, Cascarilla explained that stablecoins would be unable to build trust without regulation, which is critical to attracting interest from outside of the crypto community. You can’t change the financial system in the long term without being regulated, he said.
Fundamentally, stablecoins allow a lot more inclusion, Cascarilla explained, adding that stablecoins unlock a new way to move money. “But also at the same time, you want to have the right to have oversight.”
While admitting that regulations can be a hindrance at the early stages of a project, he said, “There’s a real difference between building it the right way from the beginning and building it with the backfill mentality.” While it can work in other industries, it’s not the right approach to take in a highly regulated industry like financial services, he stated.
Speaking on regulators’ money laundering concerns regarding stablecoins, Cascarilla noted that the number-one currency used for money laundering is physical United States dollars.
Conversely, “a stablecoin is going to allow you to be able to understand each hop along the way,” he said, adding:
“It’s publicly available. It’s pseudo-anonymous. The amounts that move are well-known to everybody. And they are fully auditable forever.”
Cascarilla said that, ideally, a central bank should be the one to issue a stablecoin in the future. “But there’s so much discovery that needs to happen before that. The market needs to winnow out what works and what doesn’t work. Being regulated is a way to show what works.”
Paxos is known for its regulation-friendly development. Earlier this year, the United States Office of the Comptroller of the Currency granted Paxos a federal charter to form a national trust bank. Recently, Bank of America joined Paxos Settlement Service for settling stock trades.