The International Monetary Fund (IMF) has released a comprehensive report detailing the potential impact of the expanding stablecoin market and assessing the adequacy of current global regulations in managing this growth. The report, titled "Understanding Stablecoins," released on Thursday, analyzed the diverse approaches taken by various regions, including the United States, the United Kingdom, Japan, and the European Union, in developing regulatory frameworks for stablecoins.
While the IMF acknowledged that emerging regulations could help mitigate risks to macrofinancial stability, it characterized the current landscape as "fragmented." This fragmentation is evident in both the approaches adopted by policymakers and the varied methods by which stablecoins are issued.
"The proliferation of new stablecoins across different blockchains and exchanges raises concerns about inefficiencies due to potential lack of interoperability," the IMF stated. "Moreover, this can introduce differences and roadblocks among countries, due to different regulatory treatment and transaction hurdles."
"Although regulation of stablecoins helps authorities address [certain] risks, strong macro-policies and robust institutions [...] should be the first line of defense [...] International coordination remains key to solving these issues."
The report provided insights into the reserves backing major stablecoins. It noted that two of the largest stablecoins by market capitalization, Tether's USDT and Circle's USDC, are "backed mostly" by short-term US Treasurys, reverse repo collateralized with US Treasurys, and bank deposits. Specifically, forty percent of USDC's reserves and approximately 75% of USDT's reserves consist of short-term US Treasurys. Tether's stablecoin also holds 5% of its reserves in Bitcoin.
The vast majority of the global stablecoin market is comprised of coins pegged to the US dollar. However, a limited number of issuers have denominated their offerings in other currencies, such as the euro. As of December, the total stablecoin market was valued at over $300 billion.
The GENIUS Act and US Stablecoin Regulation
Following the signing of the GENIUS bill into law by US President Donald Trump in July, regulators have been actively working to establish a comprehensive framework for payment stablecoins within the country. Blockchain security auditor CertiK reported on Thursday that this legislative action has effectively led to the segregation of liquidity into distinct pools for US and EU stablecoins.