Stablecoins' Role in Global E-Commerce and Regulatory Challenges

According to Cointelegraph, stablecoins are gaining popularity but still account for a small portion of global online commerce transactions. A report released on November 27 by Quinlan & Associates and blockchain developer IDA reveals that cryptocurrencies, including stablecoins, represent just 0.2% of global e-commerce transaction value. Despite their potential to offer cost efficiency, enhanced transparency, 24/7 availability, and faster processing compared to traditional financial systems, stablecoin usage remains largely confined to the Web3 ecosystem. Regulatory uncertainty and the scarcity of stablecoins pegged to currencies other than the United States Dollar (USD) are significant barriers to broader adoption. The report highlights that 81% of merchants cite regulatory uncertainty as the primary obstacle to accepting digital assets like stablecoins as mainstream payment options. Additionally, with 83% of countries worldwide not using the USD as their official or secondary currency and approximately 40% of international payments conducted in non-USD currencies, there is a pressing need for stablecoins pegged to other currencies. Currently, stablecoins collectively represent a market capitalization of $200 billion, with the majority pegged to the USD. Tether (USDT) and USD Coin (USDC) are the most popular stablecoins, with market caps of around $130 billion and $40 billion, respectively. IDA has announced plans to launch a stablecoin pegged to the Hong Kong Dollar (HKD) to facilitate payments between Hong Kong and global markets. The US Department of the Treasury notes that the growth in stablecoins has likely led to a modest increase in demand for short-dated Treasury securities, as most stablecoin collateral reportedly consists of Treasury bills or Treasury-backed repurchase agreement transactions. Former US Senator Pat Toomey indicated that lawmakers might advance stablecoin regulations starting in 2025, addressing unresolved issues such as reserve requirements, insurance on bank deposits, and regulatory jurisdiction. Key crypto legislation, including Senator Bill Hagerty’s Clarity for Payment Stablecoins Act, will be considered in the upcoming congressional term.