Why the US Needs Stablecoin Rules Now
The US must urgently pass strong stablecoin regulations to lead in financial innovation and maintain the dollar's global dominance amidst rising cryptocurrency interest.
To maximize the benefits of new financial technologies, the US needs strong stablecoin legislation now. The European Union's Markets in Crypto Assets (MiCA) regulation offers a model, providing consumer safeguards and setting strict requirements for issuers.
MiCA's introduction of transaction limits and capital mandates is a major step in Europe, prompting the US to consider similar or improved regulations. With rising interest in cryptocurrency and elections nearing, both political parties see crypto as a way to show progress. The Financial Innovation and Technology Act for the 21st Century (FIT21) in the House shows the demand for clear regulations.
Stablecoins represent a $150 billion global market, and many countries, including Singapore and the UK, have already regulated them. In the US, Senators Lummis and Gillibrand introduced a bill in April for stablecoin clarity. Without federal laws, issuers face inconsistent state regulations, affecting fund segregation and asset integrity.
Support for stablecoin regulation is growing, with consensus on the need for robust issuer requirements to protect consumers. Clear guidelines will help US businesses and provide more opportunities for the public.
Stablecoins can transform payments and financial access globally. They are already used for humanitarian aid in Ukraine and cashless payments in rural Colombia, offering a stable digital asset for low-cost transfers and local currency conversions in volatile regions.
Ignoring stablecoin regulation in the US would be a mistake. Over 95% of stablecoins are dollar-denominated, making the US central to this debate. Stablecoins enable global digital dollar holdings, making US regulation crucial.
Congress must establish a strong legal framework for stablecoins, ensuring the US leads the debate and does not fall behind. Legislation will benefit consumers, the industry, and reinforce the dollar's global status.
Candace Kelly, Chief Legal and Policy Officer for the Stellar Development Foundation, highlights the need for stablecoin regulation. The SDF supports the Stellar network, connecting global financial systems. Kelly's experience includes roles at Uber Technologies and the US Department of Justice.
In conclusion, as global finance evolves, the US must adopt comprehensive stablecoin regulations to lead in financial innovation and maintain the dollar's dominance.
