The stable and clear reserve backing of stablecoins has made it one of the crypto niches with growing demand. As a financier and stablecoin industry expert, Dr. Bhaskar Dasgupta, Chairman of the Middle East Stablecoin Association, has opened his heart to AltCoinDesk, talking about the growth of stablecoin globally and in the Middle East.
Stablecoins could be more systemically important than other crypto
“We are on the path of evolution of virtual assets,” said Dr. Bhaskar Dasgupta. He said that stablecoins are the newest addition to the evolving virtual asset industry, which is steadily growing.
People now understand the concept of virtual assets, and this adds to one of the reasons why stablecoins are more systemically important than even Bitcoin and other cryptocurrencies.
Secondly, stablecoins are backed by units of securities, either fiat currencies, treasury bills, short-term instruments, or liquid instruments.
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Stablecoins are systematically important enough that pretty much every central banker loses his sleep over it.
Dr. Bhaskar Dasgupta, Chairman, Middle East Stablecoin Association
Stablecoins as an investment option
When asked about the incentives behind investing in stablecoins or other cryptocurrencies, Dasgupta took a measured approach. He asserted that stablecoins are backed by underlying assets, making them look more like financial securities.
In his viewpoint, traditional financial securities like T-bills require a large minimum investment, such as $100,000, which is 10% of $1 million. However, for stablecoins, investors can start with $10. “So, from a financial inclusion perspective, stablecoins are amazing,” he said.
Dasgupta added, “however, there are logistical challenges for stablecoins. For example, two weeks back, I was trying to buy a book using USDT, and it took me 24 hours because they were using a payment mechanism for which I had to register, and I couldn’t transact for 24 hours.”
What’s powering stablecoin growth
When a product becomes familiar to users, it tends to witness a higher adoption rate. Likewise, people have started to understand and become familiar with stablecoins, and this is one of the reasons why the demand for stablecoins is accelerating at a rapid pace.
Another reason that Dasgupta points out is that for the first time, money can be programmed to do things, referring to the launch of Bitcoin, which is also applicable to stablecoins.
Some 50 years ago, the US dollar was backed by gold, maintaining the stability of the dollar. Similarly, paper currency was backed by bullion (gold or silver in bulk). “The value of the currency was the amount of gold/silver/brass it had.”
The same safe backing happens in stablecoin, and the only difference is that these coins have smart contracts and are hence called programmed. As such, money can move automatically when certain codes in smart contracts work and can interact with other digital assets. In Dasgupta’s words, “money can jump through hoops” and “they can start doing magic.”
Middle East’s stablecoin race
In the Middle East, especially the UAE, stablecoin growth is not an exception. Nearly 40 stablecoins fly across the Middle East region, where some of them are yet to be approved.
More regulators may come to allow stablecoin issuance applications this year. “And that actually is going to bring the Gulf together. And I’m looking forward to that, ” said Dasgupta.
UAE Dirham pegged to US dollar: The greatest advantage
When asked about regulatory sandboxes in the Middle East, Dr. Bhaskar responded from a slightly different perspective. In the European Union, Markets in Crypto Assets (MiCA) plays an important role in shaping the crypto industry.
Likewise, the US has the GENIUS Act. For the UAE, besides proper regulations, one of the greatest advantages is that “fiat currencies are pegged against the US dollar.”
He finally emphasized that regulatory sandboxes in the UAE are what make the country progressive. If someone has an idea worth exploring, this region gives the opportunity to turn that idea into reality within the regulatory framework.
Bottom Line
In an interview with AltCoin Desk, Dr. Bhaskar Dasgupta, Chairman of the Middle East Stablecoin Association, said that stablecoins are a new addition to the virtual asset industry and are becoming a growing asset today. Regulatory sandboxes are also important in this expanding stablecoin landscape, and this is something that countries like the UAE, the EU, and the US have implemented. He further added that stablecoins are not simply digital tokens but are backed by real securities.
