The United States President Donald Trump has been a critic of cryptocurrencies and stablecoins so far. Now, however, one of Trump’s former campaign advisors is about to launch a stablecoin relying on a fractional reserve. What’s more, this comes as the Financial Action Task Force recently said that stablecoins may soon take mass adoption of crypto global.
Trump advisor creates stablecoin instead of joining Fed
This most recent story concerning Donald Trump’s former campaign advisor was first picked up by Fortune. According to the piece, Trump’s ex-advisor in question – Stephen Moore – has said that he will launch a stablecoin by the name of Frax.
Frax will supposedly be backed by a fractional reserve of US dollars, which lends the stablecoin stability compared to ”pure” cryptos. Nevertheless, this is different to – for example – Tether, in that Frax will not be pegged one-to-one to a reserve of US dollars.
Instead, the currency will ie to algorithms that loan out the existing reserves and earn interest on them. As such, the Frax stablecoin will theoretically be able to make surer that the value of the coin remains tied to that of the US dollar.
Furthermore, Moore aims for the stablecoin to be launched in the coming months. At the time of writing, Frax has not disclosed any outside investors. A somewhat similar project called Basis, backed by Andreessen Horowitz, failed last year after raising $100 million to create a fractional reserve stablecoin.
Will stablecoins replace regular currencies?
However, both Moore and his business parter, Sam Kazemian, are on record as saying that the Frax stablecoin will build on existing blockchains. This will reportedly make sure that it comes with a ”tamper-resistant public record”.
Moore has actually been quite outspoken about his support for crypto, which is notable considering his ties to Trump. Earlier this year, Trump made some waves when he nominated Stephen Moore to be his pick for the Federal Reserve.
Although the nomination ultimately fell short, this shows that Moore is no stranger to the word of traditional fiat currencies. According to Fortune, Moore’s libertarian views made supporting crypto an easy decision. Moreover, he has also said that crypto could be a very real alternative to state-backed currencies:
”I’ve followed monetary policy for 30 years and always been troubled by the government monopoly on currency, which is unhealthy for markets […] It’s very healthy for private competitors to challenge central banks over the money supply. […] If I had been on the Fed, I would like to have seen encouragement for the development of cryptocurrencies like Frax. It can be a check and balance against runaway currencies.”
Rasmus Pihl is a writer for Toshi Times by day and an avid follower of the blockchain industry by night. Rasmus holds a Bachelor’s Degree in Marketing from the Gothenburg School of Business, Economics, and Law and runs a Swedish marketing consulting firm. Moreover, when he isn’t writing for Toshi Times, traveling, working or changing the world in some other capacity, Rasmus is more than likely caught up in postgraduate studies.