As Congress struggles to resolve big issues like funding for Ukraine and Israel, the debate over legislation to regulate stablecoins seems like small potatoes. But there is a connection, which is that stablecoins could have national security implications: Unless we strengthen their regulation, they could undermine our ability to use sanctions to advance our national interests. This was illustrated recently by news that Russian smugglers have used Tether, the largest stablecoin, to avoid Western sanctions and purchase billions of dollars worth of weapons.
Authors
- Acknowledgements and disclosures
- Timothy Massad is a Research Fellow and Director of the Digital Assets Policy Project at the Harvard Kennedy School, and a former chairman of the U.S. Commodity Futures Trading Commission. The idea for this paper originated in conversations with Joshua Younger, Senior Advisor at the Federal Reserve Bank of New York and a Lecturer at Columbia Law School. The author is indebted to Mr. Younger for his ideas and for sharing his research on the history of the Eurodollar market. The author also benefited from conversations, comments and suggestions from Dan Awrey, Sumon Dantiki, Darrell Duffie, Umar Farooq, Howell Jackson, Stuart Levey, Gordon Liao, Antoine Martin, Hal Scott and Daleep Singh.
- Published in
- United States of America
