Benzinga - The global standard-setters have declared that no current stablecoin satisfies all pertinent regulatory mandates and that even if a fully compliant stablecoin were to emerge, its efficacy in enhancing cross-border payments remains questionable.
This revelation is like to be a topic of discussion at Benzinga's Future of Digital Assets conference on Nov. 14.
The Committee on Payment and Market Infrastructures (CPMI), responsible for setting guidelines for the Bank for International Settlements, acknowledged the potential of stablecoins to "open up opportunities" by hastening transactions and reducing costs, Coindesk reported.
However, the committee believed the inherent challenges, such as "coordination, competition, network scale and market structure, and the absence of universally harmonized and robust regulation, supervision, and oversight," might overshadow the anticipated advantages.
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There is an urgency to establish regulations for stablecoins, with digital currencies pegged to other assets like fiat money.
Further fueling concerns was the incident in May 2022 when TerraUSD (CRYPTO: USTC), a major stablecoin, unexpectedly delinked from the U.S. dollar, sending shockwaves through the crypto realm.
The Financial Stability Board (FSB) cautioned prevailing stablecoins will likely not meet upcoming guidelines.
Last year, the CPMI initiated an investigation into the potential of stablecoins to enhance cross-border payments. The conclusions drawn were not positive: "The report acknowledges that no stablecoin arrangements yet exist that are deemed to be properly designed and regulated and fully compliant with all relevant regulatory requirements," a distinct commentary on the findings stated.
Additionally, the report suggests that even if ideal stablecoin frameworks were in place, the negatives might eclipse the positives in terms of cross-border payments.
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