TAIPEI (Taiwan News) — Mega Financial Chair Dong Rui-bin (董瑞斌) discussed the development of stablecoins at a media gathering in Taipei on Thursday. 

Stablecoins are a type of cryptocurrency that are pegged or  “stabilized” by a currency on a one-to-one basis. The recent passage of the US Genius Act has sped up the regulatory process, clearing the way for broader use of stablecoins for transaction settlement, per CNA.

However, there is a downside to stablecoins as they bear no interest and have no investment value, according to Dong. Furthermore, consumers may find redemption inconvenient, limiting overall effectiveness.

Dong said US Treasury bonds are the main beneficiary as stablecoin issuers are mandated to keep currency reserves. He said this regulation supports the US dollar and the US federal government reserves.

For example, Dong said an issuer purchasing three-month US Treasury bills worth US$10 million (NT$301 million) can issue stablecoins of equal value. The issuer does not have to pay interest to the holders of the stablecoin, but obtains interest income from Treasury bills, so many companies are eager to be issuers.

Dong said Taiwan does not need to introduce funds to rescue the bond market or government reserves, creating less impetus for domestic stablecoins. In his opinion, there should be no reason for the supervisory authority to stop issuers of domestic stablecoins if they meet all applicable regulations.