"Stablecoin Adoption Stymied by U.S. Regulatory Vacuum"

The adoption of stablecoins in the U.S. is being hindered by the lack of clear regulatory frameworks, according to a recent report by S&P Global Ratings. The absence of such regulations is a significant barrier to wider adoption and institutional acceptance of stablecoins, as highlighted by analysts led by Mohamed Damak.

S&P Global Ratings expects the adoption of stablecoins to grow once a comprehensive regulatory framework is established. Stablecoins, which are cryptocurrencies pegged to the value of another asset like the U.S. dollar or gold, play a crucial role in cryptocurrency markets and are also used for international money transfers.

Legislative efforts are underway to address this regulatory gap. The Senate's Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act proposes federal regulation for stablecoins with a market capitalization exceeding $10 billion, with the potential for state regulation if it aligns with federal rules. Meanwhile, the House of Representatives' STABLE Act calls for state regulation without any conditions.

Once a regulatory framework is in place, some users may shift from unregulated to regulated stablecoins, potentially reshaping the industry landscape. Stablecoins are expected to play an increasingly important role in on-chain transactions, safeguarding users' savings from local monetary instability in emerging markets and facilitating cross-border payments.

Wall Street bank JPMorgan recently warned that Tether, the issuer of the market-leading stablecoin USDT, could face challenges from proposed U.S. stablecoin regulations. The report suggested that Tether might need to sell some of its Bitcoin holdings to comply with these rules.