Stablecoins: Clean Up or Miss Out on the Future
Richard Turrin
Helping you make sense of going Cashless | Best-selling author of "Cashless" and "Innovation Lab Excellence" | Consultant | Speaker | Top media source on China's CBDC, the digital yuan | China AI and tech
Thanks for reading the “Cashless” newsletter, an insider’s view on Asia’s fintech, CBDC, and AI for anyone striving to understand “the Asia Century.” I’m Rich Turrin, and these are my hard-hitting insights into what’s going on behind the news.
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Hello you wonderful reader!
This week, we’re focusing on stablecoins! How could I avoid that topic with Trump requesting stablecoin legislation before the August congressional recess and Tom Emmer proposing another bill to enact a law banning a US CBDC?
Stablecoins are poised to become a key part of the US financial infrastructure and a major digital means of payment for retail and institutional use. This is good news, and we hope they become as common as Campbell's soup! This will be good for everyone.
While regular readers know my preference for CBDC over stablecoins, I welcome any technology modernizing payments.
If we listen to the crypto bros, stablecoins are good to go and ready for global adoption. As you might expect, I disagree!
My lead story shows how stablecoins are used for far too many illicit transactions and are the main tool of money launderers around the globe. In fact, I calculate that about 1% of all stablecoin use is for illicit transactions.
Surprised? Stablecoins are so good at money laundering that they are one factor behind the big drop in the illicit use of bitcoin!
As if stablecoin’s use in money laundering wasn’t enough, my next article covers two key operational issues with stablecoins that must be resolved. The two issues are compliance with US stablecoin regulations and interoperability with the existing financial system.
These are just two more big hurdles for stablecoins to clear before they go mainstream. Neither is impossible but both will take precious time.
Speaking of going mainstream, AI certainly is doing just that! AI is everywhere and growing in use by the minute. The problem is that while AI is mainstream, AI governance still lags behind. This is a classic case of putting the cart before the horse.
You’d think that AI governance would match or lead AI implementation, but sadly, there is a lot of ungoverned AI out there. Some surveys show that only 15% of companies have board-level AI governance.
To be fair to stablecoins, it isn’t just stablecoins that have problems with illicit cash flows. “Money Mules” remain a major problem for money laundering at traditional financial institutions.
Money mules may move money through ATMs or traditional transfers and are hard to detect without AI. Interestingly, the AI used for this role isn’t GenAI but more traditional machine learning which is better suited to pattern recognition.
I close with two fantastic reads that I can recommend for everyone.
The first is a plan for fintech development in Switzerland. I guarantee you that no Swiss passport is required to read this beautifully written document. The themes it covers are universal and the chapter on digital ID is highly recommended.
Finally, I’ve attached a great read from MIT and Microsoft on customizing GenAI for value. Running an LLM out of the box won’t make money for anyone. The only way to profit with AI is to customize it to create new value. Read on to see how!
Thanks once again for reading. I appreciate each and every one of you opening your inbox for me!
Rich
PS
Thanks for sharing with your friends! It’s a great way to say thanks.
1. Read why stablecoins are dirtier than advertised!
Stablecoins: Clean Up or Miss Out on the Future
2. Two big hurdles remain for stablecoins…see why neither is easy.
Stablecoin Best Practices: No Easy Fix
3. The classic “horse before the cart,” govern AI after it launches…read on
AI Governance: Now or Never
4. See why Machine Learning does better than GenAI in this role…
Crushing The $3.1 tn Money Mule Crime Machine With AI
5. Great read, not just for the Swiss. The section on digital ID is great!
Swiss Pathways For Financial Innovation: Stunning Views For The Brave
6. Bonus Read: Customizing GenAI for Value: Where the Money Is
Customizing GenAI for Unique Value: MIT Tech Review
18MB ? PDF file ? Download
Microsoft and MIT with a great report that "highlights the motivations, methods, and challenges faced by technology leaders as they tailor AI models to create net new value for their businesses."
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FinTech | Payments | Banking | Innovation | Leadership
17 小时前A great read Richard. One of the biggest potential areas for Stablecoins is that they could bridge traditional banking with decentralized finance. Of course a lot depends on regulatory clarity, mainstream adoption, and integration with the existing financial set-up and new things like CBDCs. Everyone is watching carefully US developments.
Master Future Tech (AI, Web3, VR) with Ethics| CEO & Founder, Top 100 Women of the Future | Award winning Fintech and Future Tech Influencer| Educator| Keynote Speaker | Advisor| (ex-UBS, Axa C-Level Executive)
18 小时前AI governance now or never..much needed yesterday.