The development of global standards for stablecoins has experienced a slowdown over the past year, sparking concern 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 come to a halt. This development has raised concerns, with Bank for International Settlements General Manager Pablo Hernández de Cos emphasizing the importance of global cooperation to prevent 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 push forward with their own frameworks, often with different approaches and timelines, the stablecoin sector continues to grow, currently valued at $320 billion.
The sector's expansion has led to concerns about its structure, with de Cos noting that stablecoins can resemble securities more than traditional cash, and that redemption issues can cause prices to deviate from their intended value. To reduce risk, proposals include limiting interest payments on stablecoins and providing issuers with access to central bank lending facilities. Policymakers believe these 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 lawmakers are working to address open questions and reach a compromise.