Work on global standards for stablecoins has slowed over the past year, raising concerns among central bankers that gaps in oversight could split markets and amplify risk.
Bank of England Governor Andrew Bailey, who chairs the Financial Stability Board, said progress on international rules has stalled, Reuters reported last week. That’s a concern, Bank for International Settlements (BIS) General Manager Pablo Hernández de Cos said Monday in Japan.
Global coordination is essential to avoid a patchwork of rules that companies can exploit, de Cos said, according to Reuters. Without international alignment, companies may move operations to jurisdictions with lighter oversight, a practice known as regulatory arbitrage.
The warning comes as major economies push forward with their own frameworks, often on different timelines and with different approaches.
The stablecoin sector has grown over the past few years and now accounts for $320 billion, according to DeFiLlama. Tether’s USDT and Circle Internet’s (CRCL) USDC make up most of this number. De Cos said their structure may resemble securities more than cash, noting that redemption frictions can push prices away from their intended $1 value.
He also said sudden pullbacks could ripple through markets. Proposals to reduce the risk include limiting interest payments on stablecoins and giving issuers access to central bank lending facilities or deposit insurance arrangements.
Politicians argue that 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 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 have negotiated a compromise on the stablecoin dividend that could pave the way for a markup, while Senator Cynthia Lummis, who chairs the Banking Committee’s digital assets subcommittee, has said a hearing could come in the second half of April.
An agreement remains contingent on resolving several open issues, including DeFi oversight and ethics provisions.
