The development of international standards for stablecoins has decelerated over the past year, sparking concerns among central bankers that regulatory gaps could lead to market fragmentation and increased risk. The Governor of the Bank of England, Andrew Bailey, who chairs the Financial Stability Board, noted that progress on global rules has stalled. This has raised concerns with the General Manager of the Bank for International Settlements, Pablo Hernández de Cos, who emphasized the importance of global coordination to prevent a patchwork of regulations that companies could exploit.
Without international cooperation, 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 timelines and approaches, the stablecoin sector continues to grow, with a current value of $320 billion.
The sector's structure can be more similar to securities than cash, 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 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 leading the push for its approval. A deal is contingent on resolving several open questions, including DeFi oversight and ethics provisions.