Future battlefield: will stablecoin issuers compete with banks?

Stablecoin companies will have to take the risk before they get into the finance system, as mentioned in Fitch Ratings December report.

At the same time, analysts pointed out that regulatory transparency and certainty of the status of digital currencies and their issuers can create market opportunities since the threats associated with regulation prevent traditional financial institutions from cooperating with cryptocurrency projects.

Fitch Ratings experts believe using a more open and strict regulatory mechanism could clarify how the credit profiles of companies issuing stablecoins differ from ordinary participants in the depository market.

According to analytics, the EU became the first global economy where different terms and rules for stablecoins were voiced. That is why in the EU more often calls for regulation of digital assets on a similar basis to banks or electronic payment services are increasingly heard.

But in the United States, proposals are voiced to impose the exact requirements for crypto projects as for insured banking institutions. And the timing of the adoption of the relevant laws that would make it possible to implement such recommendations is still unclear.

Fitch Ratings believes that defining the US government’s approach to regulating the cryptosphere is especially important for the medium-term development of the industry since a significant proportion of stablecoins on the market are pegged to the US dollar.

If crypto projects work on the same principle as depository organizations, they can become an alternative to banks and non-bank financial service providers. But, as analysts point out, there are still serious obstacles to integrating stablecoins.

Do you think regulators will allow stablecoin issuers to become direct competitors to private financial institutions?