Key facts: The FSB highlights the growth of the stablecoin market in Argentina, Brazil and Nigeria. The organization recommends applying strict regulation for stablecoins. According to the latest statistics from the data firm Token Terminal, stablecoin transfers have multiplied more than sixteen times in the last four years. A figure that is taken as a sign of the growing mass adoption of cryptocurrencies around the world. The firm's charts indicate that the monthly volume of stablecoin transfers reached an all-time high of USD 1.68 trillion last April, compared to USD 100 billion in October 2020. This is figures that are constantly increasing have raised the alarms of the Financial Stability Board (FSB), an international body created by the G20 that sees the mass adoption of stablecoins as «an imminent danger» for global finance. In an analysis published a few days ago, the FSB explains that emerging and developing market countries are the ones that are most using this type of currency, which most people use as a bridge between fiat money and cryptocurrencies such as bitcoin (BTC). It stands out among the countries that use them the most, including Brazil, Argentina and Nigeria. These countries and all those where adoption is increasing, according to the report, may be exposed to «macro-financial risks» arising from the use of stablecoins. linked to foreign currenciesprimarily the dollar. According to the FSB, stablecoins can destabilize financial flows and strain fiscal resources in countries where people use this type of currency a lot. It notes that their use as a means of payment and even as a store of value «is increasing on a large scale and in multiple jurisdictions,» thereby increasing the risksThe international body, which is responsible for monitoring and making recommendations on the global financial system, fears that the time will come when holdings of stablecoins are not really redeemable for fiat currenciesThis is due to issues related to financing and liquidity, which increases the outlook for systemic risk.
The Financial Stability Board is made up of representatives from 20 countries and organizations including the European Central Bank, the International Monetary Fund and the World Bank. Source:
Financial Stability Board (FSB) / LinkedIN It also considers that stablecoins expose their users to dangers related to possible fluctuations in the value of the currency, caused by variations in the underlying assets. «Even a moderate variation in its value can cause significant fluctuations in the wealth of users,» the FSB notes. In the eyes of the agency, the risk is so broad that it also includes infrastructure problems.
A sustained use of these digital currencies, for payments of all kindscould test the ability of the supporting infrastructure to handle high transaction volumes and the funding conditions of the financial system at large. Financial Stability Board.
G20 pushes for strict regulation of stablecoins
Based on all of the above, the G20 – through the Financial Stability Board – calls on governments to implement strict regulation that mitigates the dangers of stablecoins and puts a little brake on its use. In this sense, it describes the Cryptoasset Market Regulation (MiCA), which came into force on June 30 in the European Union, as an example to followAs reported by BitcoinDynamic, MiCA has imposed a series of demands for the issuance and trading of stablecoins, which many consider restrictive. This, to the point that the dominant stablecoin in the market, USDT, chose not to register and will stop circulating in the region. The issuing company Tether did not agree to apply the capital and reserve limitations required by the Regulation European. However, for the Financial Stability Board these types of requirements are the most appropriate. Therefore, it advises all jurisdictions implement laws similar to MiCA in their jurisdictions. Additionally, it recommends adhering to international regulations and maintaining broad cooperation between nations «to ensure comprehensive regulation.» The message on regulation It is particularly aimed at Latin American countries, including Brazil and Argentina.where the popularity of stablecoins is notable. “In Brazil alone, the number of legal entities and individuals who reported ownership of stablecoins and cryptoassets in the last year increased by more than 178%,” the report indicates. 93% of the total volume relates to stablecoins (85% comes from USDT). In Argentina the situation is similar. There it is estimated that, only during 2023, around USD 55 million were moved monthly in the cryptocurrency sector. A large majority of that trading volume It is related to the stablecoin USDT.
But the stablecoin market continues to grow
The FSB report is published in a context where stablecoins have become an important tool of the cryptocurrency market. A fact that has influenced the rise in adoption, also reflecting greater confidence in its use cases.
Stablecoin transfer volume, monthly chart. Source: Token Terminal. On this topic, Transak co-founder and CEO Sami Start highlights one of the uses that has become more frequent in the last year, and which has to do with the integration of stablecoins. to the tokenized assets sector (RWA). For the expert, the growing utility of stablecoins demonstrates their potential to improve economic inclusion and reshape traditional finance. “People now use stablecoins to buy property, secure loans and facilitate borderless transactions. Far from supporting the FSB’s fear, Start thinks that this fact democratizes access to wealthallowing anyone, anywhere, to participate in global financial markets,” he concluded.