Challenges to U.S. Dominance in Stablecoins

Frequently, regulators, policymakers, and industry commentators have evaluated prospective stablecoin regulations by comparing them to the risks associated with traditional payment facilitators. I contend that stablecoins don’t inherently pose greater or lesser risks but rather introduce distinct risks. To elaborate, the full backing of stablecoins can serve to mitigate systemic risk and streamline regulatory oversight in comparison to conventional banks. However, stablecoins also bring about novel operational risks stemming from their underlying technology and their role in innovative payment activities that may not have been within the purview of regulators before..