U.S. Stablecoin Regulation and Adoption

The absence of stablecoin regulation in the U.S. is one of the main hurdles to adoption, according to a report from S&P Global Ratings released on Wednesday.

Key Points

• Analysts led by Mohamed Damak emphasized that the lack of regulation is a significant impediment to stablecoin adoption in the U.S., hindering broader institutional use.
• S&P expects adoption to increase once appropriate regulations are established.
• Definition: Stablecoins are cryptocurrencies tied to another asset’s value, such as the U.S. dollar or gold, playing a crucial role in cryptocurrency markets and international money transfers.

Upcoming Regulations

New regulations are forthcoming:
– The Senate’s GENIUS Act mandating federal regulation for stablecoins with a market cap over $10 billion, along with possible state regulation if it complies with federal guidelines.
– The House STABLE Act proposes state regulation without any conditions.

According to the report, a regulatory framework may prompt some users to transition from unregulated to regulated stablecoins, potentially transforming the industry landscape.

Importance of Stablecoins

The authors noted that stablecoins will increasingly impact on-chain transactions, safeguarding users’ savings from local monetary instability in emerging markets and facilitating payments.

JPMorgan recently indicated that Tether (issuer of USDT), a market leader, may face challenges stemming from proposed U.S. stablecoin regulations.

Read more: Tether May Have to Sell Some Bitcoin to Comply With U.S. Stablecoin Rules: JPMorgan