The development of global standards for stablecoins has slowed down over the past year, prompting concerns among central bankers that regulatory gaps could lead to market fragmentation and increased risk. Bank of England Governor Andrew Bailey, who chairs the Financial Stability Board, noted that progress on international rules has stalled. This slowdown is a concern, according to Bank for International Settlements (BIS) General Manager Pablo Hernández de Cos.
De Cos emphasized the importance of global coordination to prevent a patchwork of regulations that companies could exploit by moving operations to areas with less stringent oversight. Major economies are moving forward with their own frameworks, but often at different paces and with varying approaches. The stablecoin sector has grown significantly over the past few years, now accounting for $320 billion, with Tether's USDT and Circle Internet's USDC making up the majority of this figure. De Cos pointed out that the structure of these stablecoins can resemble securities more than traditional currency, and that difficulties in redeeming them can cause their prices to deviate from their intended value of $1.
He also warned that sudden withdrawals could have a ripple effect through the markets. To reduce these risks, proposals include limiting interest payments on stablecoins and providing issuers with access to central bank lending facilities. Policymakers believe such measures could enhance the safety of the sector while preserving its role in digital payments.
In the United States, lawmakers are working to pass the Digital Asset Market Clarity Act, which aims to establish federal rules for digital asset markets. The bill has passed the House and is currently before the Senate, where committee chairs are leading the effort to move it forward. A potential compromise on stablecoin yield could pave the way for further action, although several issues, including oversight of decentralized finance (DeFi) and ethics provisions, remain to be resolved.