Financial Stability Board: Stablecoins are still a niche
According to the global watchdog, the stablecoin sector, which is currently valued at $133 billion, does not serve any significant payment scale. This opinion emerged in an FSB roadmap and progress report issued today on account of improving cross-border payments. The Board published its first targets for enhancing these in October 2020.
2021’s progress report acknowledged that stablecoins could contribute to the improvement of cross-border payments. According to data from CoinGecko, stablecoin issuers have minted more than $133 billion worth of tokens.
The report stated:
From a policy perspective, there is value in assessing whether and how the use of well-designed global [stablecoins] could enhance cross-border payments. An action to that extent has been added. As a next step, the FSB will review, in consultation with other relevant [Standard-Setting Bodies] and international organizations, the FSB high-level recommendations and how any gaps identified could be addressed by existing frameworks, and update recommendations if needed, by July 2023.
MoneyGram eyeing private stablecoins to accelerate transactions
Regulators are getting nervous because MoneyGram and other major cross-border payment companies have shown an interest in using USDC and other private stablecoins to speed up cross-border transaction rates.
Moreover, the FSB roadmap is just one of many documents that consider regulation and the role private stablecoins play in cross-border transactions. The Bank for International Settlements (BIS) recently published guidance on how stablecoins could be subjected to international payments laws.
BIS and IMF encourage national banks to explore CBDCs
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At the same time, global financial watchdogs are encouraging national banks to study so-called CBDCs or Central Bank Digital Currencies. BIS, the IMF, and the World Bank have all commented central banks had to consider these assets’ cross-border implications. Benoit Cœuré, the head of BIS Innovation Hub, said:
CBDCs will take years to be rolled out, while stablecoins and crypto assets are already here. This makes it even more urgent to start.
Redemption rights and wallet providers ‘in the way’ of specific recommendations
According to the FSB roadmap, stablecoin regulation is still at a very early stage and different jurisdictions are considering different approaches. Aspects like wallet providers, redemption rights, and stablecoin reserve asset management are stopping authorities from making specific recommendations.
CBDCs to cut processing time and costs
Research by BIS concluded that these assets might cut the costs and time needed to process cross-border payments. According to the FSB roadmap, the WB and the IMF must be ready to provide technical assistance on facilitating CBDC cross border use.