The development of global guidelines for stablecoins has decelerated over the past year, prompting concern among central bankers that inconsistent regulation could lead to 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 concern about this slowdown, emphasizing the need for global cooperation to prevent a patchwork of regulations that companies could exploit by relocating to areas with less stringent oversight. Major economies are moving forward with their own regulatory frameworks, often at different paces and with different approaches.
The stablecoin market has grown significantly over the past few years, now valued at $320 billion, with Tether's USDT and Circle Internet's USDC making up the majority of this figure. De Cos pointed out that the structure of stablecoins can resemble securities more than traditional currency, and that difficulties in redeeming them can cause their prices to deviate from their intended value of $1. He also highlighted the potential for sudden withdrawals to have a ripple effect through markets.
Proposed measures to mitigate these risks include capping interest payments on stablecoins and allowing issuers to access central bank lending facilities. Policymakers believe such measures could enhance the safety of the sector 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. The bill, currently before the Senate, seeks to provide clarity on the regulation of digital assets, including stablecoins.
Senators are negotiating a compromise on stablecoin yield, which could pave the way for further action on the bill.