Cross-border Transactions Need More Non-USD Stablecoins: Report
A new report suggests the low rate of non-USD-backed stablecoins is affecting wider digital asset adoption. Global trade has been a recurring bison for the crypto market but has performed poorly over the years due to regulatory and industry-related factors.
The report, From Digital Currency to Legal Tender: The Role of Regulated Stablecoins in Driving Real-World Payments, drafted by Quinlan & Associates and IDA, shows limitations in present stablecoin utility, a possible pathway to asset adoption, and regulations.
Per the release, stablecoins can transform cross-border payments and domestic trade through speed and security. Another major factor for stablecoin adoption is the ability to process transactions within 24 hours and make it more efficient. Several countries have also tried to make their stablecoin replica in the form of Central Bank Digital Currencies (CBDCs) backed with local assets.
In the case of domestic payments, users can leverage programmable features to set self-executed scheduled top-ups, conditioned payments, and instant settlements. For cross-border payments, stablecoins can support faster, cheaper, and more transparent user experiences. In these two realms, stablecoins will play a critical role in supporting Hong Kongs ambition to become a leading global Web3 hub.
Non-USD Stablecoin Can Raise Adoption
At the moment, stablecoins account for 0.02% of global trades, a low figure compared to the level projected by maker participants. Two major reasons for this are regulation and the absence of non-USD stablecoins. According to the report, 83% of countries globally are not using USD as their main or substitute currency.
Although USD remains the most popular asset, about 40% of global trade is in non-USD currencies creating a need for similar stablecoins. The absence of this creates scarcity in the market that could easily be filled boosting the total industrys numbers.
Lack of Regulation Stalls Adoption
The stablecoin market cap stands at $200 billion, with USD-based assets making up the majority. Another factor responsible for the slow adoption is regulation. At the moment, some countries have yet to pass comprehensive crypto laws, creating a vacuum.
This leads to regulatory uncertainty, plunging investor sentiments as they avoid such markets. The report states that 81% of global merchants cite the lack of proper regulations as a major barrier to the adoption of stablecoins.
Adding to the complexities are frequent lawsuits filed by regulators due to an absence of rules. A notable example is the United States Securities and Exchange Commissions (SEC) approach in the last two years.
Read more: https://zycrypto.com/cross-border-transactions-need-more-non-usd-stablecoins-report/
Text source: ZyCrypto
