Lightning Labs CEO hints at imminent arrival of Bitcoin-backed stablecoins

Stablecoins on the Bitcoin network are moving closer to reality thanks to new functionality developed by Lightning Labs using the Taproot upgrade. Elizabeth Stark, the CEO of Lightning Labs, shared this latest development at FT Live’s Crypto and Digital Assets summit in London. She also provided a comprehensive explanation of Bitcoin and the Lightning Network to a traditional finance audience. The Taproot Assets protocol developed by Lightning Labs is working on bringing stablecoins and tokenized assets to Bitcoin. Stark explained that significant progress has been made in this direction, including the testing of transactions on Lightning. She argued that Bitcoin’s network is well-suited for stablecoin use because it is the most secure and decentralized blockchain. Stark also discussed the value of Bitcoin and stablecoins as a store of value, particularly in countries dealing with inflation and devaluation of fiat currencies. She noted that stablecoin adoption has grown substantially since the COVID-19 pandemic, with many users in emerging markets. Stark emphasized that the need for a store of value is driving the choice of holding stablecoins in countries facing hyperinflation or unstable economies. She highlighted the fact that the two largest stablecoin players, Tether and Circle, hold more US Treasury bonds than major nations like Germany and South Korea, despite end users not benefiting from the interest. Given the significant growth in the stablecoin market, Stark emphasized the need for infrastructure to enable the issuance of stablecoins and real-world assets on the Bitcoin blockchain. She explained that Lightning Labs is building the protocol and technology to support this, allowing asset issuers to tokenize real-world assets. Financial institutions could then issue gold assets, stablecoins, and other fiat-backed assets on Bitcoin and transact over the Lightning Network. Stark also highlighted the competitive advantage of Bitcoin’s lower costs compared to other blockchains and traditional finance systems, enabling global transactions at more affordable rates.