Current Stablecoin Regulation Is Reactionary: Frax Co-Founder

Frax’s protocol works by targeting the open market

Sam Kazemian, co-founder of Frax Finance, a decentralized stablecoin crypto exchange, explained that the regulatory action against stablecoins mainly concerns those covered by traditional financial investments.

In an interview with Cointelegraph, Kazemian explained that the stablecoin regulations proposed worldwide can be seen as a reaction, as they require banking licenses for stablecoin issuers such as Circle and Tether.

He stressed the need for discussion on the topic of regulation and pointed out that there is also a lot of experimentation in the traditional financial area:

„Things like money market funds do not have a banking charter. It’s not a bank. It is not FDIC (Federal Deposit Insurance Corporation) insured. People either don’t notice it or they don’t get informed.”

Kazemian believes that such regulatory barriers do not particularly affect truly decentralized stablecoins like Frax, as they have absolutely no claim to real assets and do not advertise any form of investment.

Not only does Frax meet all the requirements, but its nature as a fully decentralized company ensures that it can comply with all future regulations, Kazemian said, adding that the whole point of Frax is that its protocol is open-market oriented.

When asked what distinguishes Frax from the many algorithmic stablecoins out there, the co-founder replied that Frax’s system, in which the protocol expands and contracts the supply at different points across blockchain protocols, and targets the exchange rates of the Frax stablecoin on the open market, makes it special.

„We like to compare it with a central bank. When she issues a Währung, she never says: ‚Hey, you can deposit her against that amount of goldösen or deposit her at the central bank against something dollar-pegged‘“, explain Kazemian.

He went on to add that the company’s algorithmic stablecoin thesis was developed on this theory and that Frax had never broken its bond, not even during the market crash in May.

The Current Stablecoin regulation is reactionary: Frax co-founder appeared first on Coin Hero.

Stay in the Loop

Get the daily email from CryptoNews that makes reading the news actually enjoyable. Join our mailing list to stay in the loop to stay informed, for free.

Latest stories

You might also like...