The International Monetary Fund (IMF) published an extensive report addressing the implications of the rapidly expanding stablecoin market and the effectiveness of current global regulations dealing with it.

In the report titled Understanding Stablecoins, released on Thursday, the IMF examined how various regions—such as the United States, the United Kingdom, Japan, and the European Union—have approached regulatory frameworks for stablecoins.

While highlighting that emerging regulations might alleviate macrofinancial stability risks, the IMF indicated that the regulatory landscape remains “fragmented,” in terms of both approaches and stablecoin issuance.

The IMF expressed concerns regarding the rise of new stablecoins on different blockchains and exchanges, noting:

“The proliferation of new stablecoins across different blockchains and exchanges raises concerns about inefficiencies due to potential lack of interoperability. Moreover, this can introduce differences and roadblocks among countries, due to different regulatory treatment and transaction hurdles.”

The report further emphasized:

“Although regulation of stablecoins helps authorities address [certain] risks, strong macro-policies and robust institutions […] should be the first line of defense […] International coordination remains key to solving these issues.”

It noted that Tether’s USDT and Circle’s USDC, which are two of the largest stablecoins by market capitalization, are primarily backed by short-term US Treasurys, alongside other financial instruments. Approximately 40% of USDC’s reserves and nearly 75% of USDt’s reserves are in short-term US Treasurys; interestingly, Tether’s reserves also include 5% in Bitcoin.

The vast majority of the global stablecoin market remains linked to the US dollar, though a few issuers offer currencies pegged to other currencies, including the euro. The total market value has surpassed $300 billion.

Implementation of the GENIUS Act in the US

Subsequent to US President Donald Trump’s signing of the GENIUS bill in July, regulators in the US have been working intensively to create a thorough regulatory framework for payment stablecoins in the nation. According to a report by blockchain security firm CertiK, the enactment has effectively segregated liquidity pools for US and EU stablecoins.

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