Challenges Facing U.S. Stablecoin Adoption Due to Regulatory Gaps, According to S&P Analysis
A report from S&P Global Ratings highlights the regulatory obstacles hindering stablecoin adoption in the U.S., indicating expected growth upon the establishment of new regulations.
The absence of stablecoin regulation in the U.S. is one of the main hurdles to adoption, S&P Global Ratings stated in a Wednesday report.
“The lack of regulation is one of the main impediments to stablecoin adoption in the U.S. and has prevented a broader institutional adoption of stablecoins,” analysts led by Mohamed Damak wrote.
S&P expressed optimism that adoption would increase once appropriate regulations are established.
Stablecoins are cryptocurrencies whose value is pegged to assets like the U.S. dollar or gold. They serve a crucial function in cryptocurrency markets and for international money transfers.
New regulations are forthcoming. The Senate’s Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act mandates federal oversight for stablecoins valued over $10 billion, alongside potential state regulations that would align with federal guidelines. In contrast, the House’s STABLE Act proposes state regulations without prerequisites.
The report indicates that some users may transition from unregulated to regulated stablecoins once a regulatory framework becomes available, potentially transforming the market landscape.
“Stablecoins will play an increasingly important role in on-chain transactions,” the authors noted, helping safeguard users’ savings from “local monetary instability in emerging markets” and facilitating payments.
Major financial institution JPMorgan (JPM) forecasted that Tether, the issuer of the leading stablecoin USDT, might encounter challenges due to impending U.S. stablecoin regulations, as mentioned in a recent report.
Read more: Tether May Need to Liquidate Some Reserves to Meet U.S. Stablecoin Compliance: JPMorgan
