The development of global standards for stablecoins has experienced a significant slowdown over the past year, raising concerns among central bankers about potential market fragmentation and increased risk. Bank of England Governor Andrew Bailey, who chairs the Financial Stability Board, recently stated that progress on international rules has come to a standstill. This has prompted the General Manager of the Bank for International Settlements, Pablo Hernández de Cos, to emphasize the importance of global cooperation in avoiding a fragmented regulatory landscape.
De Cos warned that without international alignment, companies may take advantage of jurisdictions with more lenient oversight, leading to 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, particularly that of major players like Tether's USDT and Circle Internet's USDC, can resemble securities more than traditional currency, and redemption issues can lead to price fluctuations. To address these risks, proposals include limiting interest payments on stablecoins and providing issuers with access to central bank lending facilities. Policymakers believe such measures can enhance the sector's safety while maintaining 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.
The bill, currently before the Senate, seeks to provide clarity on the regulation of digital assets, including stablecoins. While progress has been made, several key issues, including DeFi oversight and ethics provisions, remain to be resolved.