Dark Stablecoins May Be the Next Big Trend in Crypto as Governments Tighten Their Grip

In a recent tweet, CryptoQuant CEO Ki Young Ju warned that “dark stablecoins” may be the next big trend in crypto as governments tighten their grip on digital assets.

CryptoQuant CEO Ki Young Ju recently took to Twitter to share his thoughts on what he predicts could be the "next big trend" in crypto as governments around the world continue to increase their scrutiny of digital assets.

According to Ju, Bitcoin was born out of the cypherpunk movement to be largely "censorship-resistant and belongs to no one," which makes it almost impossible for any government to control.

In contrast, stablecoins have always needed a central authority, usually a private company like Tether or Circle, to back their value with real-world assets like cash held in banks.

And for the past few years, most governments have largely ignored stablecoins unless there were concerns about money laundering. This hands-off approach made stablecoins a popular tool for many groups, including Chinese Bitcoin miners, who used them as a stable store of value or to move funds across borders without friction.

But Ju says things are now starting to change.

In the future, he believes that stablecoins that are issued or approved by governments could face "huge taxation, frozen wallets, or mandatory KYC paperwork," making it harder for users to transfer funds freely.

Essentially, the open financial system that stablecoins once offered may soon look a lot more like the current banking system.

In response to this growing censorship, Ju says that dark stablecoins - private, unregulated alternatives - may soon emerge in two main forms.

One interesting possibility he mentioned is a decentralized stablecoin that mirrors the price of regulated ones like USDC, using decentralized data oracles like Chainlink.

While he hasn't seen a project doing this effectively yet, Ju suggests it could be a strong use case in the future.

Another interesting idea Ju floated is that Tether (USDT) - which is the most widely used stablecoin - could potentially take on a "dark stablecoin" role.

If Tether decides not to comply with future U.S. regulations, especially under a second Trump administration, it may be seen as a censorship-resistant alternative in an increasingly controlled internet economy.

It remains to be seen what new trends will emerge in the crypto markets in the second half of 2023. But as the industry continues to evolve, it will be interesting to see how these developments unfold.