The unbanked banking on blockchains

About 1.7 billion adults are unbanked , i.e. without an account at a financial institution or through a mobile money provider. The World Bank has made it a priority to promote financial inclusion. Access to and use of formal financial services is considered a key to drive development, and key in helping people escape poverty.”

It is true that stablecoins hold the promise of a new form of money, and with such a currency the unbanked population only needs a mobile phone and an internet, to be financially included. But, stablecoins only hold a partial answer for the unbanked; if it comes without a strong consumer protection and supervision we endanger introducing a wolf in sheep’s clothing to the most vulnerable.

The term “stablecoin” refers to a collection of non-uniform user agreements of various issuers of fiat-linked tokens. The EU e-money, however, is a digital alternative to cash defined in EU law, tried and tested for two decades; only authorized issuers can use the term. It is a technically neutral standard which dates back to 2000 and has previously been used on other media, such as debit cards. It is well-defined and established licensing framework for digital cash emphasizing consumer protection.

Although financial inclusion is not regarded as a basic human right, it is a vital part of economic and social equality and a force to fight poverty. Financial inclusion and financial services is a privilege, but maybe it should be considered as a global right rather than a privilege. Stablecoins hold a promise but global trusted legal standard securing consumer protection, like e-money, is needed.

Originally posted on Medium by Jon Helgi