As bitcoin, the world’s largest cryptocurrency, struggles to recover after a massive crash, regulatory and private sector focus has turned to another part of the digital currency world: stablecoins.
The past week saw Meta Platforms Inc pilot its stablecoin payments wallet, while the world’s largest payments processor Visa launched a crypto advisory service and said stablecoins, might become the medium of exchange rather than cryptocurrencies.
Stablecoins are a form a virtual currency with values pegged to traditional assets such as the U.S. dollar or commodities, and their rise has accelerated discussion by central banks across the world about digital versions of their currencies.
Analysts at digital platform Alkemi Network were among those who hailed Visa’s move as evidence that the cryptocurrency and decentralised finance ecosystem is moving towards maturity.
“Making a visible attempt to play by traditional finance rules is definitely gathering momentum as a movement within the crypto ecosystem,” they wrote.
Japan’s financial regulator said last week it will come up with rules in 2022 to restrict the issuance of stablecoins to banks and wire transfer firms.
In the United States, even as top executives from major cryptocurrency companies including Coinbase and Circle urged Congress to provide clearer bespoke rules for the industry, Treasury Secretary Janet Yellen and a group of bank chief executives discussed the need to regulate stablecoins.
Meta’s cryptocurrency wallet, Novi, will allow users to send and receive money through the social media giant’s messaging app WhatsApp and will use a stablecoin named Pax Dollar .
Research platform Delphi Digital says stablecoins have grown substantially in the past month, with the market capitalisation of the top five stablecoins swelling to nearly $150 billion from $129 billion. Tether, the largest stablecoin, has a market value of $76 billion.
Meanwhile, the central banks of Switzerland and France claimed success in Europe’s first cross-border trial of central bank digital currency (CBDC) payments, after testing project Jura, named after the mountains between the two countries.
DAILY NATION
