Originally published on: November 27, 2024
Stablecoins are on the rise but are still a small player in global online commerce transactions. A recent report published by strategy consultancy Quinlan & Associates and blockchain developer IDA sheds light on the potential of stablecoins pegged to currencies other than the US dollar.
Cryptocurrencies, particularly stablecoins, currently only account for 0.2% of global e-commerce transaction value. Despite this, they offer unique benefits such as cost efficiency, transparency, 24/7 availability, and faster processing. Lawrence Chu, the CEO of IDA, highlights these advantages as game-changers in the financial landscape.
However, the adoption of stablecoins faces challenges, with regulatory uncertainty and limited options for non-USD stablecoins cited as significant barriers. The report emphasizes the need for stablecoins pegged to currencies other than the USD to meet global demands.
Currently, stablecoins collectively hold a market capitalization of $200 billion, with the majority pegged to the USD. Popular stablecoins like Tether’s USDT and USD Coin (USDC) dominate the market, showcasing the potential for growth in this sector.
Recognizing this opportunity, IDA plans to launch a stablecoin pegged to the Hong Kong dollar to facilitate cross-border payments. Additionally, the US Treasury Department notes an increased demand for short-term US government bonds, known as Treasury bills, due to the growth in stablecoins.
Looking ahead, lawmakers are gearing up to address stablecoin regulations by 2025. Former US Senator Pat Toomey anticipates key questions surrounding stablecoin issuers, including reserve requirements and regulatory jurisdiction, to be resolved in the coming years.
As the crypto landscape evolves, diverse stablecoins could revolutionize the way we transact online. Stay tuned for more updates on this exciting development in the financial world.