Adoption of stablecoins by US-based consumers is facing a problem Slowdown in 2024 Even as there is increased activity in Bitcoin which rose in popularity after the launch of Bitcoin exchange-traded funds.
The chart below shows a decline in transactions made by US-regulated platforms in just under a year. This can be attributed to the growing problem of US-based stablecoins in terms of regulation and adoption within the country.
This suggests that emerging market stablecoins with bases outside the US are seeing higher execution. like stablecoins Due to increasing usage globally, this type of digital asset is being used to hold value and conduct cheap transactions in every nook and corner of the world.
Share of stablecoin inflows to exchanges regulated in the United States and those not regulated in the US. Source: Chainalysis
Global demand for US dollar-backed assets
As countries aim to create a more stable asset base, usually in the form of the dollar, stablecoins will help promote global financial inclusion, especially in regions where there are few, if any, stablecoins. Such a need for reliable and well-guarded assets will boost the use of stablecoins.
As of today, the market cap of cryptocurrencies stood at $2.26 trillion. Chart: TradingView.com
By the end of 2022, it was noted that about $1 trillion in US dollars were found abroad, which is equivalent to approximately half of the total GDP. Offer is in US dollars It also underscores how stablecoins are increasingly replacing dollar cash in markets where local currencies are vulnerable to fluctuations.
Image: Built In
The results are consistent with the words of Paolo Ardoino, CEO of Tether, who recently stated that demand for stablecoins mainly comes from developing countries such as Argentina, Turkey and Vietnam. In such areas, people look for stablecoins for protection against inflation and currency erosion and, therefore, are increasingly using them as financial instruments for daily operations and deposit purposes.
Stablecoins: Regulatory Challenges and the US Position
The lack of an appropriate framework for digital assets puts the United States at a competitive disadvantage; Financial centers in Europe and the UAE attract stablecoin projects due to friendlier regulatory environments. according to Sequential analysisCompanies like Circle have pointed out that the lack of a US regulatory framework for stablecoins could pose a threat to US interests.
More countries are stepping up to establish clear guidelines encouraging the use of stablecoins and the United States is not lagging behind in the call to action; Chainalysis argues that it is this gap in regulation that is likely to ensure that the country remains competitive in the emerging digital assets landscape, providing the impetus for innovation within the stablecoin market.
Featured image from Pexels, chart from TradingView