For privacy coins that are not stablecoins, the largest single-week losses so far this year have ranged between 24% and 34%, the HRF notes; a fact that bolsters the attractiveness of stable-value crypto assets, particularly for citizens in hyperinflationary economies.
Blockchain-based stablecoins do not only provide the stability advantages of the U.S. dollar but can “democratize access to that stability,” according to the report.
The HRF further states that such assets have the potential to free citizens from the deleterious impact of state-imposed capital controls and from centralized oversight by digital payment processors and other bank and non-bank intermediaries.
Yet for all these prospective advantages, the HRF deems censorship resilience and privacy to be a crucial — and under-scrutinized — aspect of the asset class.
As compared with fiat currencies, all stablecoins can be held and transacted pseudonymously with public-private cryptographic key-pairs and are broadly more resistant to censorship or forfeiture by state authorities or extortion by criminal actors.
However, per the report, several stablecoin issuers may themselves compromise the potential financial autonomy of citizens by introducing blacklists that enable them to freeze stablecoins held at specific addresses, so as to contain the adverse impact of hacks, for example.
The issuers of Tether (USDT), USD Coin (USDC), TrueUSD (TUSD), Pax Standard (PAX), and Binance USD (BUSD) all have this functionality, the report notes.
HRF’s report includes a list of selected dollar-pegged assets indicating whether or not they can be frozen and, moreover, whether their code — the full blockchain and smart contract logic that underpins the assets — is open source.
Privacy features of various stablecoins. Source: HRF
While open sourcing…