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Crypto: Stablecoins ‘would be the biggest benefactor’ of a Fed CBDC, expert says

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Decrypt Writer Scott Chipolina joins Yahoo Finance Live to discuss the outlook for cryptocurrency regulation, the stablecoin industry, Fed Chair Powell's stance on central bank digital currencies (CBDCs), and the most influential cities for crypto.

Video transcript

[MUSIC PLAYING]

EMILY MCCORMICK: Bitcoin prices are steadying after a volatile start to 2022. Prices are currently trading just below $43,000 after briefly falling below $40,000 for the first time since September earlier this week. Let's bring in "Decrypt" writer Scott Chipolina for more.

Scott, thank you so much for joining us. I want to talk a little bit first about the congressional testimony from Federal Reserve Chair Jerome Powell because in that, he said that the central bank will release a report on digital currencies in the coming weeks. And as we look ahead to the potential for the Fed to implement its own digital currency, what do you think this would mean for existing digital currencies and their adoption going forward?

SCOTT CHIPOLINA: Thanks, Emily, and happy new year. Well, I think that, first and foremost, we should take this with a-- with a pinch of salt, and just remember that this report has-- has been pushed back a few times before. But as-- as Jerome Powell said, we should be expecting this now in just a few weeks.

I think the biggest takeaway here is that we are going to get some much-needed clarity from-- from the government when it comes to regulating crypto and the Fed's stance on not only CBDCs but also stablecoins. And I think that, in particular with CBDCs, Powell has been fairly tight-lipped throughout the last year and a little bit into this year when he said that his-- his line has really been, it's better to be right with CBDCs than-- than fast, or than first. And obviously, he's sort of leant on that position as China has-- has sort of sped ahead with the digital yuan.

But at the same time, the stablecoin industry and crypto, I think, is going to be particularly excited to read this report. Last year, Powell testified in front of the House of Representatives and said that he believed the stablecoin industry should be regulated to some degree similar to that of bank deposits. And I think that, if that is to be the case, that at least will provide some-- as I said, some much-needed clarity because the stablecoin industry-- in particular, in crypto-- I think is the-- would be the biggest benefactor when it comes to some regulatory and political currency coming from the Fed.

ADAM SHAPIRO: I want to shift to a different kind of report because, at the end of the day, we all want to make money if we're investing in crypto. And it's "Decrypt's" article on the 15 most influential cities on crypto worldwide. I picked out a few favorites. Miami was number four. New York was number six. Can you help us understand? Because impact could be bad impact. Why New York is number six, why Miami is number four, and some of the criterion used to make that determination?

SCOTT CHIPOLINA: Yeah, absolutely. I mean, it was a-- it was a really interesting discussion that we had on "Decrypt" and a really fun piece to write, really, and take stock of where crypto has sort of expanded globally.

In terms of the criteria, I think that we've-- we've just leant on, you know, the-- the year long of reporting that we've done on some of these places that really stood out to us, Miami being, you know, a-- a big portion of-- of our reporting. Or a lot of the stories have been coming out of Miami, I think, for the last year, not only with Mayor Francis Suarez being, you know, extremely bullish on the crypto industry, but a lot of devs and a lot of companies going to Miami in order to-- to expand their-- their business.

We've seen, for example-- I mean, the biggest story there would likely be FTX and CEO Sam Bankman-Fried pivoting really heavily to Miami and establishing a deal that renamed the Miami Heat home stadium to the FTX Arena. So that was a huge story, and we all thought really unanimously that Miami was deserving of the top five spot.

New York just slightly missed out, but again, that's a really, really interesting space to watch, especially now with the recent election of-- of Eric Adams to-- to the mayor office in New York. And I think that one of the biggest stories coming out of there is that he vowed to have his first three paychecks in Bitcoin. So that's, again, a really, really good, interesting collision point between politics and crypto.

But one of the places that I think is particularly interesting is Washington, DC. It was a-- it came second on our list, and there was a lot of conversation amongst us at "Decrypt" about whether or not it should be first and overtake San Francisco. The reason for that is because, you know, as we've already just mentioned, the impact of the Fed and the impact of-- of regulation and politics is now becoming more and more apparent in the crypto industry.

And I think that one-- one point of particular reference would be with-- with Washington, DC, is that it's not only political anymore, and it's also not only regulatory. If you look, again, at Sam Bankman-Fried and FTX, who have put a lot of resources, let's say, in sports marketing, one of the deals that they've established is with the Washington Wizards. And I've got a quote here that I'll just read, which I think is quite telling, which says, "To be able to have a presence in DC in this manner goes hand in hand with our desire to work with everyone involved to make sure that crypto is done properly."

That was Avinash Dabir, who is the vice president of business development at FTX US. And I think that sort of underlines what we've already seen with DC and what we can see coming up in the district in terms of a lot of serious attention being paid to the crypto industry and the crypto industry and turn reciprocating and want to have a foot-- wanting to have a footprint in the district as well.

EMILY MCCORMICK: Scott, I'm going to put you on the spot a little bit here. But as we look ahead to 2022, who do you think are some of the biggest players-- you know, individual players in the crypto space or on the regulatory front-- that you think investors should really be listening to for clues about where the space is actually going to be heading?

SCOTT CHIPOLINA: Sure. Well, one of the things that I'm particularly interested in at "Decrypt" is the ongoing public discussion that we're having about the environmental impact of the crypto industry. And within that narrative and within that wider public conversation, I think that there's been a bit of a political divide between the right and the left in the United States where guys like Ted Cruz on the right have been saying that the blockchain industry is a really powerful industry that we can-- just waiting to be tapped into.

But then we've got folks on the left like Elizabeth Warren saying that the climate impact of the crypto industry is something that we really need to clamp down on. And she actually went on record last year and said that one of the easiest things that we can do to-- to help with, you know, climate issues, or climate-related issues, is to clamp down on the crypto-- on the crypto industry.

So I think that that would be-- if I was to give any sort of suggestions to people of who they want to be listening to, I think, you know, in the same sort of realm of political influences over crypto and Washington, DC, those are two very big political names in the United States that I think have generated a lot of headlines over the year for crypto. And I don't think that that will stop anytime soon.

EMILY MCCORMICK: All right, Scott Chipolina, "Decrypt" writer, thank you so much for your time.

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