Without a robust regulatory framework that incentivizes stablecoin issuers to register in the United States, stablecoin activity will migrate to countries with weaker rules, increasing the likelihood of financial instability. Fortunately, the US can still head off these risks and reap the technology’s benefits.
NEW YORK – The global financial system is on the brink of a transformation. As a recent Bretton Woods Committee paper points out, stablecoins – digital assets usually backed by a fiat currency, commodity, or another cryptocurrency to minimize volatility – have the potential to make payments and money transfers faster, cheaper, and more transparent, while also expanding financial inclusion. That is why many jurisdictions, including the European Union and Japan, have already sought to seize the opportunity by providing regulatory clarity for the industry. But it is the United States that is ultimately best positioned to lead, given that the $200 billion in stablecoins circulating today are predominantly denominated in dollars.
NEW YORK – The global financial system is on the brink of a transformation. As a recent Bretton Woods Committee paper points out, stablecoins – digital assets usually backed by a fiat currency, commodity, or another cryptocurrency to minimize volatility – have the potential to make payments and money transfers faster, cheaper, and more transparent, while also expanding financial inclusion. That is why many jurisdictions, including the European Union and Japan, have already sought to seize the opportunity by providing regulatory clarity for the industry. But it is the United States that is ultimately best positioned to lead, given that the $200 billion in stablecoins circulating today are predominantly denominated in dollars.