The development of global standards for stablecoins has slowed down over the past year, raising concerns among central bankers that inadequate oversight could lead to market fragmentation and increased risk. Bank of England Governor Andrew Bailey, who chairs the Financial Stability Board, has stated that progress on international rules has stalled. This has prompted the Bank for International Settlements (BIS) General Manager Pablo Hernández de Cos to emphasize the importance of global cooperation in avoiding a patchwork of regulations that companies could exploit.
De Cos warned that without international alignment, firms may relocate to jurisdictions with less stringent oversight, a practice known as regulatory arbitrage. As major economies move forward with their own frameworks, often with different approaches and timelines, the stablecoin sector continues to grow, with a current value of $320 billion.
The sector's structure can be more similar to securities than traditional currency, and redemption issues can cause price fluctuations. To reduce risks, proposals include limiting interest payments on stablecoins and providing issuers with access to central bank lending facilities. Policymakers believe these measures can make the sector safer while preserving its role in digital payments.
In the United States, lawmakers are working to advance the Digital Asset Market Clarity Act, which aims to establish federal rules for digital asset markets. While the bill has passed the House, its progress in the Senate is contingent on resolving several open questions, including DeFi oversight and ethics provisions.