When Will Stablecoin Regulations Be Finalized Globally?

Datum: 23.01.2024

Stablecoins: Essential Elements in the Crypto Market with Rising Calls for Regulation Stablecoins are cryptocurrencies pegged to external sources such as the USD or gold, often in a 1:1 ratio. These coins provide stability in the otherwise volatile cryptocurrency market, enabling their use for payments and trading. However, their increasing adoption has led to rising concerns about regulation and risks associated with their use.

The FSB Stand on Regulation of Stablecoins

Sadržaj sakriti

1 The FSB Stand on Regulation of Stablecoins

2 Increased Market Cap and Legal Tender in Lugano

3 FSB Demand Regulation

4 The US Draft Bill on the Regulation of Stablecoins

5 Will Wyoming Get Its Stablecoin?

The Financial Stability Board (FSB) recently highlighted the growing risks posed by stablecoins to the global financial system. As stablecoins increasingly facilitate both domestic and international payments, FSB insists on the need for regulation to mitigate risks such as liquidity, credit, and operational threats. A sudden loss of confidence in stablecoins could trigger runs, causing disruptions in the financial system.

Increased Market Cap and Legal Tender in Lugano

The market capitalization of stablecoins has surged significantly, reaching over $157 billion by the end of 2021 compared to $5.6 billion two years earlier. Tether (USDT) is among the largest stablecoins, with market capitalisation nearing major money market funds. Lugano, Switzerland, recently made stablecoins and Bitcoin legal tender, allowing citizens to pay taxes and other services with these assets under its “Plan B.”

FSB Demand Regulation

To prevent adverse effects on the financial system, FSB calls for regulations on stablecoin redemption rights and reserve asset management. Unregulated redemption rights could result in liquidity crises and domino insolvencies, posing a systemic risk to the broader financial landscape.

The US Draft Bill on the Regulation of Stablecoins

New Jersey Representative Josh Gottheimer has proposed a draft bill for regulating stablecoins. The bill suggests qualifying certain stablecoins pegged 1:1 with the US dollar, issued by federal or non-bank financial institutions with adequate reserve backing. The bill aligns with broader efforts in Washington to regulate cryptocurrencies while fostering innovation and managing systemic risks.

Will Wyoming Get Its Stablecoin?

Wyoming lawmakers have proposed the creation of a state-issued stablecoin. The Wyoming Stable Token Act (#SF0106) envisions a state-backed stablecoin to align with the push for regulatory compliance while promoting financial innovation in the crypto market.

Top Stablecoins to Watch

CryptoChipy provides in-depth reviews of stablecoins, including: