The stablecoin industry, featuring prominent cryptocurrencies like Tether (USDT) and USDC, has experienced remarkable growth over the past year, reaching new market value highs in 2023. Despite this rapid expansion, regulatory developments have been limited, as highlighted in the PwC Global Crypto Regulation Report 2023, published on December 19.
Key insights from the report include:
Limited Regulatory Adoption: As of 2023, only six countries have implemented specific stablecoin legislation or regulation. These are The Bahamas, The Cayman Islands, Gibraltar, Japan, Mauritius, and Switzerland. These countries not only have stablecoin laws but also enforce other critical crypto-related regulations, including Anti-Money Laundering (AML) rules and the Financial Action Task Force’s Travel Rule.
Global Regulatory Landscape: The report assessed crypto regulations in 35 countries, including major economies like the United States and the United Kingdom. Notably, countries such as the U.S. and the U.K. have yet to finalize stablecoin-specific legislation and develop a comprehensive regulatory framework for cryptocurrencies.
Varied Levels of Regulatory Progress: Among the countries analyzed, 40% (14 jurisdictions) have not initiated any stablecoin regulations. This group includes nations like Denmark, Estonia, France, Germany, Taiwan, and Turkey. Meanwhile, 25% of the jurisdictions, including Hong Kong and Italy, are in the initial stages or have plans for stablecoin regulation. Only about 9% of countries, such as the United Arab Emirates, are in the final stages of enacting stablecoin laws.
Cryptocurrency Prohibitions: Three countries – mainland China, Qatar, and Saudi Arabia – have outright banned the use of cryptocurrencies.
Stablecoin Market Growth: Tether, the most traded cryptocurrency asset, has seen its daily trading volumes surpass those of Bitcoin by 23%, reaching $34 billion. Tether’s market capitalization alone exceeded $90 billion in mid-December 2023, marking a 36% increase since January. The total market capitalization of stablecoins has set new records, reaching $131 billion.
Future Outlook: Analysts, including Bitwise’s Ryan Rasmussen, predict that stablecoins could see further growth, potentially settling more money in 2024 than global payment giant Visa.
This report underscores the burgeoning significance of stablecoins in the global financial landscape and the pressing need for more comprehensive regulatory frameworks to manage this rapidly evolving sector.
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