Gu Yanxi: Should Amazon issue its own digital dollar stable currency?
In the US market, the use of encrypted digital currency has gradually been accepted by the market. These developments in the US market are also driven by the policies of US financial regulators. In 2020, the OCC, which regulates the U.S. banking industry, made it clear that federal banks can provide legal services to cryptocurrency companies. The OCC has also made it clear that the Commonwealth Bank can provide custody services for its reserves to private sector stablecoin issuers. These clearly stated attitudes of the OCC have eliminated the compliance concerns of the U.S. banking system in entering the field of encrypted digital currency, so more and more mainstream financial institutions have begun to enter this field.
Institutional investors are starting to see Bitcoin as an investable asset type. Recently, institutional investors have been optimistic about and buy Bitcoin. In this regard, the biggest event currently affecting the market is that PayPal began to provide its users with encrypted digital currency buying and selling services. The service will start with users in the United States and then expand to 300 million users worldwide. This move by PayPal has contributed to the recent sustained rise in the price of Bitcoin. PayPal is a mainstream financial company that has begun to use encrypted digital currency to provide related services. Before PayPal, another third-party payment company, Square, has begun to provide users with bitcoin buying and selling services. Square generates very high revenue from this business. Square's performance is clearly a major driving force behind PayPal's entry into the cryptocurrency space.
Another hot spot in the field of encrypted digital currency is the rise of DeFi. The rise of DeFi has attracted more and more dollars in the market to be converted into digital dollar stablecoins, and users can use these stablecoins to participate in DeFi.
Although the development of Libra has encountered great resistance, it now appears that it has re-entered the normal development track. The launch of the Libra stablecoin in the market is a high probability event, and the first Libra stablecoin to be launched is likely to be a stablecoin based on the US dollar.
The above developments indicate that in the U.S. market, more and more mainstream financial institutions and retail users have begun to enter the encrypted digital financial field. Correspondingly, commercial organizations in the United States also need to start thinking about their own strategies in terms of encrypted digital currency and encrypted digital assets. So will Amazon, apparently.
Amazon started from the business of selling books directly on the Internet, and gradually entered into a wider field of business operations. In terms of e-commerce, its website not only has its own operations, but also supports the operations of third-party companies. In terms of information technology infrastructure services, in order to support its e-commerce business, it has developed Amazon cloud services. Amazon cloud services are now starting to provide services to more and more companies. In terms of logistics, Amazon's own logistics services have grown rapidly in the past few years. Now Amazon's delivery trucks are everywhere. So now Amazon is providing basic services of information flow and logistics centered on its e-commerce business. In terms of money flow, that is, in the money flow field, Amazon's only product is its credit card. But credit card is a very mature financial product, and the users it can serve are also the users that other credit card companies can also serve. Amazon doesn't have any differentiating features in this regard. With the emergence of blockchain technology and encrypted digital currency, as well as the current US financial regulatory support for the development of encrypted digital finance, Amazon has the opportunity to start providing financial market infrastructure services in a new way, and issue its own The brand's digital dollar stable currency, and provide payment services based on this dollar stable currency. This US dollar stablecoin is more convenient than existing payment mechanisms in cross-border payments, so in the near future, Amazon's e-commerce business will benefit from its strategy in this regard. In the longer term, Amazon can therefore establish a financial market infrastructure to provide infrastructure services for the generation, custody, circulation, trading and settlement of digital assets. Therefore, Amazon can occupy a very strong dominant position in the future digital financial ecology.
In terms of Amazon's encrypted digital financial strategy, one of its options is to join the Libra Association and use the Libra USD stablecoin and possible future Libra digital stablecoins on the basis of the Libra blockchain. However, because Libra's strategy is too aggressive, it has aroused the vigilance of many financial regulators and central banks, so Libra will encounter great resistance in terms of market advancement. Amazon can issue USD stablecoins based only on USD from the very beginning, and it will have much less resistance in this regard. Therefore, for Amazon, issuing its own brand of digital dollar stablecoins is a more optional strategy.
But Amazon can indeed learn from Libra's strategy, which is to use the alliance method to issue this dollar stable currency. In the ecology centered on Amazon, there are various types of companies, including e-commerce, financial companies, logistics companies and so on. These companies can adopt the method of association to jointly launch a USD stable currency. These companies will all benefit from the use of this USD stablecoin. For Amazon, its first benefit is that the US dollar stable currency has more institutional support, so the use of this US dollar stable currency has better guarantees. More importantly, Amazon can use this to build a financial market infrastructure. This infrastructure can provide services to more types of institutions. Such infrastructure services are similar to the current Amazon cloud services. Amazon can carry out more types of business on top of this encrypted digital financial market infrastructure. The largest market in this regard is the full life cycle service of digital assets, that is, the digital generation, custody, circulation, transaction and settlement of assets. Therefore, Amazon no longer only provides trading and circulation services for physical goods, but also provides various services for digital assets.
