SIX Group, who operates the Swiss Stock Exchange, wants a permit by the country’s central bank to issue a form of own cryptocurrency, most likely a stablecoin, to settle payments. Our Editor-in-Chief has discussed stablecoins and the possible adoption of private money with Thierry Arys Ruiz, Founder of AgAu.io, the peer-to-peer electronic money system backed by silver and gold in Switzerland. Mr Ruiz has worked for major trading houses and financial institutions, inter alia Trafigura, Scotia Capital, ICAP and Credit Suisse. Thierry Arys Ruiz is also a Mensa member and a venture philanthropist.
Q1: An actual question first, can you compare the plans by SIX Group towards own cryptocurrency with the Libra by Facebook?
A1: I think they serve two very different purposes, one aims to continue the legacy of what is legal tender in Switzerland. My understanding is that Libra has global ambitions, I see it as another initiative like the SDR (Special Drawing Rights) from the IMF (International Monetary Fund). My own private initiative AgAu aims to be a Peer-to-Peer, Electronic Money System backed by Ag (Silver) and Au (Gold) in Switzerland. I call it “money” and not “cash” precisely because it aims to be an alternative to fiat currencies or “cash”. Libra is still within the prism of fiat currencies.
Q2: Switzerland is considered a rather favourable jurisdiction to crypto- and blockchain related projects, canton of Zug is often referred to as Crypto Valley, the Ethereum Foundation is inter alia based there. How would you describe the current Swiss political and regulatory climate with regards to new blockchain based fintech instruments? What are the major driving forces, who is for it, who is not, and what are the arguments of the sides, if any?
A2: I believe that Switzerland of all places is the best to establish a “Crypto Project”. On principle the direct democracy, constitution and private property laws give a certain guarantee of the rule of law. In theory the government see value in the new economy that is brought in by blockchain companies, meanwhile there are still bottlenecks such as opening bank accounts so perhaps traditional banks are reluctant. Overall Switzerland has a good reputation and I believe the ecosystem is growing steadily, my main concern are external political forces to the country and other lobbies who see blockchain as a threat to their supremacy.
Q3: Many have openly supported a stablecoin to be issued by the Swiss National Bank. Do you support this idea? How may a tokenized CHF be used?
A3: I believe that the free competition of money overall is a healthy thing. In the words of Hayek: “No government is capable, politically or intellectually of providing the exact amount of money which is needed for useful economic development. I am in favour and I am convinced that we will not have decent money again before we take from government the monopoly of issuing money; and allow competing institutions to issue competing moneys and let people decide which kind of money they prefer to use”.
Q4: When I tell about different kinds of cryptocurrencies, stablecoin is the most difficult to explain. How would you explain what a stablecoin is to someone who is not in crypto.
A4: I think the question is not about a stable coin which simply put is a coin that has a stable value. I think the fundamental question is to re-define what money is. Stable relative to what? Government numbers in terms of purchasing power parity?
I believe the question of money is as old as man. In truth, the question has been answered over 6000 years and there cannot be a better form of money historically known so far other than gold.
Q5: Have you used stablecoin in some of your blockchain related projects, or the projects that you have consulted. If yes, how exactly?
A5: My project AgAu is digital money. Some stable coins aim to emulate central banks by influencing supply and demand such as the defunct Basis. Others do not bother and simply peg their value to fiat. You can find our approach into delivering AgAu with our report.
Q6: The global market cap of stablecoins grows. What is your view on the future developments in stablecoins?
A6: Cryptocurrencies like Bitcoin raised the question of ‘what is money?’ back into people’s mind. The paradigm shift is moving beyond the competition of fiat money Euro versus Dollar, Dollar versus Yen, Sterling, Renminbi etc.
The competition of different forms of money will ultimately enable the emergence of a better and hopefully more stable financial system. AgAu is a form of private money guaranteeing ownership to the user without intermediaries.
We aim for a decentralised private money system and we believe that we will be the best positioned to deliver it because we are driven by the right principles.