Let’s Imagine: Crypto Assets of the Future

Plot twist: well-known economist and crypto-skeptic Nouriel Roubini is developing his own crypto asset. He set out to find a form of integration between cryptocurrencies and the real economy, and his vision seems quite intriguing.

The great thing about the crypto industry is the amount of creativity involved, particularly with all new types of assets and services. Tell me, who even heard about DeFi or synthetic tokens in 2016 or NFTs in 2017? And the innovation didn’t stop there. What is exciting about the current moment is that increasingly, unique ways of using blockchain are being discovered not by IT specialists but by economists.

Not all opponents of cryptocurrencies are contrarians who simply do not understand the ingenuity of blockchain technology or are so set in their ways that they cannot imagine an alternative to fiat money. There are quite a few thoughtful crypto skeptics who might just doubt the viability of the current cryptocurrency model, primarily because of its volatility and tenuous ties to real sectors of the economy. Among the latter is the famous American economist and critic of crypto Nouriel Roubini. So far, he has acknowledged the potential of CBDCs, but vehemently opposed most popular digital assets (even calling Bitcoin the “mother of all bubbles”). Like Warren Buffett, he sees them as unsecured and lacking real value.

It is worth remembering, however, that Roubini bashes the dollar just as much – the economist is convinced that the USD will soon lose its status as a world reserve currency due to the federal authorities’ policies and a decreasing amount of money in circulation. In their blog, Roubini and his colleagues list the main risks to dollar hegemony: inflation, the depreciation of the dollar itself, the growing influence of China, and the so-called Triffin dilemma related to the US debt burden (or “twin deficits of government budget balance and its current account balance”).

And they are not alone in expressing concern about the rate of inflation and the long-term outlook for the dollar. Prominent financiers such as Ray Dalio of Bridgewater Associates LP and Credit Suisse AG’s strategic analyst Zoltan Pozsar argue that the US currency is in danger of gradually losing its reserve status.

“The global role of the dollar could be in jeopardy as the US prints too much money and their adversaries begin to de-dollarize their economies,” Roubini said in an interview. “We have recognized that as a reserve currency, the USD is subject to risks and are developing a new tool to act like a more stable alternative.”

And just like that, the sensation was born: Nouriel Roubini and associates are working on a project to create a completely new tokenized asset, which should become an alternative to the US dollar and be a reliable hedging tool in times of high market turbulence. Simply put, the economist attempts to design what can be described as a “mega stablecoin” on the blockchain. The result of his work is actually supposed to be a whole range of financial products, including a tokenized asset, meant to collectively act as a “stronger dollar” in the face of growing inflation, climate change and civil unrest.

Roubini claims the new asset will be backed by gold, real estate and US Treasury bonds. All this will enable the creation of a reliable hedge fund resistant to inflationary processes. According to the economist, cryptocurrencies in the form they exist now are not fit for purpose.

Of course, the project is still mostly an idea, so many of the details will have to be worked out and are likely to change. But the general outline is that Roubini, a well-known crypto critic, will help develop a “stronger dollar” powered by blockchain and supported by real assets. And the project’s ambitions extend even further: according to its creators, their digital asset will be resistant to inflation and serve as a way to attract the highest possible number of people to financial flows. Eventually, if something goes wrong in the global economy, it could even serve as the global reserve currency.

The asset has already got a name: the United Sovereign Governance Gold Optimized Dollar (ticker: USG).

The technical side of the project will be handled by Dubai-based Atlas Capital Team LP. Two years ago, Nouriel Roubini joined it as co-founder and chief economist. Former employees of Meta (fka Facebook) and a Web 3.0 firm called Mysten Labs are also involved in the project.

Let’s stop here for a second and consider one important point. By and large, the United Sovereign Governance Gold Optimized Dollar is the outgrowth of Mark Zuckerberg’s idea to create an internal Facebook stablecoin backed by a basket of different reserve currencies and treasury bonds. Yes, the same Libra initiative, later renamed Diem, which was born in 2019 and cost Zuckerberg a lot of gray hair due to the extremely harsh reaction by the US authorities. Coincidentally, the project was officially closed only a few weeks ago.

Now, Nouriel Roubini undertakes to use the experience, accomplishments and personnel of Facebook/Meta to make a bold attempt at designing a fundamentally new global currency on the blockchain.

The exact date of the new asset entering the global market is still undetermined. However, Roubini’s intentions are serious, so it might happen sooner rather than later. Unless, of course, the American authorities intervene, as they did with Zuckerberg’s project in 2019.

Such a course of events is quite probable because Roubini wants to create an alternative to the dollar and US Treasury bonds, a safe-haven asset with payment functions. What’s more, USG can also offer yield, making it more attractive to hold. Although the economist definitely made sure to cover his back: in his blog, Roubini notes that the fluctuating value of USG may limit its use as a means of payment. Still, USG will inevitably be a competitor to both the cash dollar and the upcoming CBDC dollar, which is certain to draw a severe response from the US authorities.