3% of some 350 active users of Kraken have given a somewhat surprising response to what is driving stablecoin adoption.
While the vast majority said decentralized finance (defi) or a demand for stability has driven stablecoin adoption, some said it’s to avoid regulation as well or tax.
In regards to regulations, it’s not clear what they have in mind. They may be thinking of capital controls as applied in South Africa or China.
Especially for small companies that want to do international trade, getting approval by national authorities to transact in sums over say $30,000 can be a very costly and time consuming endeavor.
For something like bitcoin one doesn’t require such permission at a technical level in as far as there is no bank that can refuse to process your payment or receipt of payment.
As stablecoins run on bitcoin or ethereum, the same applies to them with the added lack of significant volatility.
For taxes as well there are suggestions that unlocking liquidity through something like DAI is a non taxable event because it’s a loan.
One has to pay back the algorithmically dollar pegged dai, therefore it’s not quite a profit or that’s the argument in any event.
The accounting industry itself seems to have different views with some saying it is taxable, while others suggest it is not. Making it a grey area.
The suggestion that dai liquidity unlocking is untaxable was a selling point at the very beginning and probably contributed to some extent towards its adoption.
Decentralized finance however played a far bigger role, with regulators very much behind in all this so they haven’t made any clarifying statement on tax applicability to these new inventions.
On the other hand, the elected especially in Europe are trying to regulate stablecoins, but more mechanistically in as far as where there’s a custodian they have to meet certain requirement, rather than whether a dai loan is taxable or not.
With that being the case, most are assuming it isn’t because you have to pay it back. However there are different views on whether this is a loophole or otherwise.
Kraken users also said they buy Chainlink for the memes, Dot as an eth alternative, and eth for many reasons, including Solidity.
They expect bitcoin’s price to reach $36,000 next year, while for this year they were happy with $14,000 according to second half responses.
In the first half, they thought it would reach nearly $23,000, with that perhaps being the more correct response as bitcoin has been trying to take $20k.
Interestingly some 26% of respondents think we’re in a bear market while 9% is unsure. The other 66% is presumably making money because bitcoin has been a bull since March.