Work on global standards for stablecoins has slowed over the past year, raising concerns among central bankers that oversight gaps could divide markets and amplify risks.
Bank of England Governor Andrew Bailey, who chairs the Financial Stability Board, said progress on international rules had stalled, Reuters reported last week. This is a concern, Bank for International Settlements (BIS) Director General Pablo Hernández de Cos said on Monday in Japan.
Global coordination is essential to avoid a patchwork of rules that companies could exploit, de Cos said, according to Reuters. Without international alignment, companies can move their operations to jurisdictions with lighter oversight, a practice known as regulatory arbitrage.
This warning comes as major economies move forward with their own frameworks, often on different timetables and approaches.
The stablecoin industry has grown over the past few years and is now worth $320 billion according to DeFiLlama. Tether’s USDT and Circle Internet’s USDC (CRCL) account for the majority of this figure. De Cos said their structure may resemble securities more than cash, noting that redemption frictions can push prices away from their expected value of $1.
He also said sudden withdrawals could impact markets. Proposals to reduce risks include limiting interest payments on stablecoins and giving issuers access to central bank lending facilities or deposit insurance-style arrangements.
Policymakers say such measures could make the sector more secure while preserving its role in digital payments.
In the United States, lawmakers are working to advance the Digital Asset Market Clarity Act, which would set federal rules for digital asset markets.
The bill passed the House of Representatives last year and is now before the Senate, where Banking Committee Chairman Tim Scott and Agriculture Committee Chairman John Boozman are leading the push. Senators Thom Tillis and Angela Alsobrooks negotiated a compromise on stablecoin yield that could pave the way for a markup, while Senator Cynthia Lummis, who chairs the banking committee’s digital assets subcommittee, said a hearing could take place in the second half of April.
A deal remains conditional on the resolution of several open issues, including DeFi’s oversight and ethics provisions.
