The development of global stablecoin standards has slowed down over the past year, sparking concerns among central bankers about potential 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. Bank for International Settlements General Manager Pablo Hernández de Cos expressed concerns about the lack of progress, emphasizing the need for global coordination to prevent a patchwork of rules that companies could exploit. Without international cooperation, firms may relocate to jurisdictions with less stringent oversight, a practice known as regulatory arbitrage.

Major economies are pushing ahead with their own frameworks, often with different approaches and timelines. The stablecoin sector has grown significantly over the past few years, with a current value of $320 billion, according to DeFiLlama. Tether's USDT and Circle Internet's USDC account for the majority of this figure. De Cos noted that the structure of these stablecoins can resemble securities more than cash, and that redemption issues can cause prices to deviate from their intended value of $1.

He also warned that sudden withdrawals could have a ripple effect on markets. To reduce risk, proposals include limiting interest payments on stablecoins and providing issuers with access to central bank lending facilities or deposit insurance-type arrangements. Policymakers argue that such measures could make the sector safer while preserving its role in digital payments. In the US, lawmakers are working to advance 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 push it forward. A compromise on stablecoin yield has been negotiated, and a hearing is expected to take place in the second half of April.

However, a deal remains contingent on resolving several outstanding issues, including DeFi oversight and ethics provisions.