While the digital currency markets were waged with fluctuations such as bitcoin, which could exceed 10% in one day, the Central Bank of Bahrain announced on the third of this July a regulatory framework for the stable currencies of these quiet bridges that link the world of traditional financing and the revolutionary digital world.
This timing is not a coincidence. In a moment when the digital economy is witnessing radical transformations, stable currencies appear as a practical solution to the chaos of fluctuations that make a currency such as bitcoin more speculative than cash.
The secret behind this stability is that cryptocurrencies depend on the mood of the market alone, while stable currencies stand on tangible pillars such as US dollars, gold, or even smart algorithms that mimic central banks ’policies.
Imagine that you are building a house on sandy land (this is bitcoin) in exchange for building a skyscraper on concrete foundations (these stable currencies), for the first may collapse with the market storm, while the second stands up because it is supported by a real value, and this is what made the Kingdom of Bahrain the financial heart of the Gulf rushed to organize this vital sector and affirm its pioneering position in the region.
But does this mean that it is without risks? Of course not, the memories of the collapse of “Terra” in 2022 still warns us that some algorithm models may be palaces of paper, and here lies the wisdom of the Bahraini organization, which imposes strict conditions for reserves and transparency representing a “safety valve” for an emerging financial system, where the exporters are required to disclose every dollar that supports their digital currency, just as the traditional banks do with the deposits.
Why is this global demand for it, then? .. Because it has resolved an impossible equation, the liquidity of digital currencies + the stability of traditional cash while the transfer of a dollar between banks takes days, the stable currencies are transmitted across the border in seconds and at the lowest costs, and because they do not rise or land like bitcoin, they have become a basic fuel for “deduction” (Defi) that parallel banking system that works without a mediator.
The decision of the Kingdom of Bahrain is a recognition that the financial future will combine the worlds of its thinking some contradictory, such as digital innovation and monetary stability.
Stable currencies are not a substitute for cryptocurrencies, but they are a necessary companion who completes them like two wings of a bird that does not fly by others.
The question now will the countries of the region follow the footsteps of the Kingdom of Bahrain to build these bridges of confidence?
