CryptoQuant CEO Ki Young Ju predicts the rise of “dark stablecoins” as government regulations on digital currencies tighten.

CryptoQuant CEO Ki Young Ju predicts the emergence of “dark stablecoins” as government regulations on digital currencies escalate. In a recent social media post, Ju explained why censorship-resistant stablecoins could become crucial with rising pressure on traditional stablecoin issuers.

As the crypto space evolves, new trends and possibilities continue to emerge. In the early days of Bitcoin (BTC), the cypherpunk community focused on developing decentralized assets free from government control, aiming to create a parallel financial system. However, the initial attempts at stablecoins prioritized stability over decentralization, leading to projects like TrueUSD and attempts at issuing private stablecoins.

Bitcoin was created by the cypherpunk community to be censorship-resistant and belongs to no one, making it impossible to control. Stablecoins, however, act as a bridge between the internet and the real world, so they need someone to manage them.

Chinese miners use Tether and Circle stablecoins

The CryptoQuant executive stated that stablecoins like those issued by Tether and Circle have operated with minimal government intervention — until now. According to Ju, this has served as a safe haven for various groups including Chinese miners.

“Governments, except when tackling money laundering, haven’t really interfered with stablecoins,” Ju added.

However, Ju predicts that government-issued stablecoins will soon face regulations similar to traditional banking. This could potentially entail automatic tax collection through smart contracts and implementing wallet freezes based on government mandates.

These changes could drive users who rely on stablecoins for large international transfers to seek alternatives that resist censorship. Ju outlined two possibilities:

Algorithmic stablecoins that aren’ /output: As the crypto space evolves, new trends and possibilities continue to emerge. In the early days of Bitcoin (BTC), the cypherpunk community focused on developing decentralized assets free from government control, aiming to create a parallel financial system. However, the initial attempts at stablecoins prioritized stability over decentralization, leading to projects like TrueUSD and attempts at issuing private stablecoins.

Bitcoin was created by the cypherpunk community to be censorship-resistant and belongs to no one, making it impossible to control. Stablecoins, however, act as a bridge between the internet and the real world, so they need someone to manage them.

Chinese miners use Tether and Circle stablecoins

The CryptoQuant executive stated that stablecoins like those issued by Tether and Circle have operated with minimal government interference — until now. According to Ju, this has served as a safe haven for various groups including Chinese miners.

“Governments, except when tackling money laundering, haven’t really interfered with stablecoins,” Ju added.

However, Ju predicts that government-issued stablecoins will soon face regulations similar to traditional banking. This could potentially entail automatic tax collection through smart contracts and implementing wallet freezes based on government mandates.

These changes could drive users who rely on stablecoins for large international transfers to seek alternatives that resist censorship. Ju outlined two possibilities:

Algorithmic stablecoins that aren’t controlled by governments.

Stablecoins issued by countries that don’t censor financial transactions.

One technical approach could involve decentralized stablecoins that track regulated coins like USD Coin using oracle networks such as Chainlink (LINK). However, Ju mentioned that he hasn’t yet identified any projects that have successfully implemented this model.

Interestingly, Ju suggested that USDT could turn into a dark stablecoin if the company decides not to comply with U.S. regulations under future administrations. The CryptoQuant CEO noted that dark assets might present investment opportunities in internet capital markets.