Steilbcoins fulfil an important role in the modern financial system, which is to provide dollar-denominated financial services to customers who are not reached by traditional financial institutions, thanks only to access to the Internet. In unstable areas, stablecoins provide an opportunity to avoid high inflation of national currencies. Their important role is also to facilitate the development of new financial innovations based on global open networks for the transmission of money flows.
The largest USD-backed steblecoins backed by bank deposits, US Treasury bills, cash equivalents or other similar high quality liquid assets today are: USDT, USDC and TUSD.
Stablecoins backed by fiat money represent the majority of non-speculative activity by market participants.
Let's take a closer look at them:
USDT
- Issuer: Tether Limited
- Reserves Report
- Registered in Hong Kong.
- Capitalisation as of 28.02.2024: $98.4 млрд
USDC
- Issuer: Circle Internet Financial
- Registered: Boston, Massachusetts, USA
- Регуляторы: SEC, CFTC и другие регуляторы
- Reserves Report
- Capitalisation as of 28.02.24: $28.19 млрд
TUSD
- Issuer: Archblock
- Registered: San Francisco, USA
- Reserves Report
- Capitalisation as of 28.02.24 $1.25 млрд
The user value of stablecoins backed by cash dollars or their equivalent, deposits, highly liquid securities is to provide:
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basic and global financial services in dollars (the ability to receive, hold, and send dollars) to almost any user with internet access, including those not served by traditional financial institutions;
- the ability to avoid high inflation of national currencies;
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the ability to make money transfers, including cross-border transfers, while avoiding high bank fees.
The growing role of stablecoins in global financial flows:
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Stablecoin transactions are showing growth, with $11 trillion in transactions in 2022, which is 14% of the volume processed by the ACH (Automated Clearing House) system and comparable to the volume processed by Visa;
- Approximately 4 million addresses send USDT on a weekly basis;
- Transaction volume of stable coins on the blockchain has shown greater resilience compared to trading volume on centralised exchanges;
- USDT and USDC dominate transaction volume, with USDT in particular showing more resilience and accounting for nearly two-thirds of total transaction volume.
Stablecoin transactions today carry many risks for the user. The main risk remains the lack of transparency in the collateralisation of assets and the uncertain regulatory environment in different jurisdictions.
In the United States, digital assets are not subject to federal regulation, but may be regulated by individual state supervisory authorities. In addition, many digital asset derivatives are regulated by the Commodity Futures Trading Commission. The SEC has warned that many initial coin offerings will likely fall within the definition of a security and be subject to U.S. securities laws.
Issuers should consider the following factors when planning their development strategy:
- JPMorgan predicts that USDT may become less attractive as future US regulations will require greater transparency and compliance with new KYC/AML standards from issuers.
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The US House Financial Services Committee has released the third version of a bill to regulate stablecoins
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Lawmakers have proposed the US Federal Reserve (Fed) as the supervisory authority for the stablecoin industry. This would oblige the regulator to prepare future asset issuance requirements. Other affiliated agencies would also be given the authority to monitor issuers.
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The European Union has adopted a law on the regulation of cryptocurrencies - Markets in Crypto Assets (MiCA). It includes rules that apply to issuers of unsecured digital assets and stablecoins, trading and custodial platforms. A single standard of cryptoasset regulation will govern the interaction of issuers and market participants with regulators and reduce costs. Licensing and control of activities may increase the attractiveness of the EU for cryptocurrency companies and token buyers.
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The Financial Stability Board (FSB) works to coordinate the activities of central banks and regulators in different countries in the regulation of digital financial assets such as stackablecoins, thereby facilitating regulatory convergence across jurisdictions