This is the Kator Daily Podcast for Friday, August 18th,

2023. I'm Caleb Brown.

Paypal's entry into the world of stable coins

will likely have a large impact on the use of

crypto currencies and traditional finance,

and quite likely it will raise the ire of many regulators

and would-be regulators.

Cato's Jack Soloway argues that we shouldn't forget that Stablecoins offer a large potential upside for users, and those same users will overwhelmingly bear the risks.

Just as background here, how well have stable coins performed? These are

coins that are pegged to the US dollar primarily. How have they performed over the

last few years since they've been introduced.

So it's a good question.

It depends on what type of stable coin one's talking about.

So there's what are known as Fiat collateralized stable Coins, where it's designed to be a relatively

straightforward asset backing of a stable coin token, where at least in theory there's 100% cash or cash equivalent reserves backing the

stable coin. There's other types of stable coins that are known as algorithmic stable coins where through sort of

some complicated math the idea is trying to keep a stable coin pegged to the value of a separate asset like a

Fiat currency like the US dollar based on the value of another crypto token that comes from the same issuer and the

engineering of exchange rates between the two of those. Those so far have faced some challenges, the algorithmic stable coins. It's a new

interesting innovative technology. I think it's fair to say that it's not yet

proven itself out. But contrasting it with asset-backed or

fiat collateralized stable coins, we've seen a decent amount of adoption in the US and around the world.

...