For past few years, a new entrant, ‘stablecoins’ slowly crept its way into the limelight, while the world focused on fintech developments, especially bitcoin and other cryptocurrencies.
The use of stablecoins has been disproportionately popular ever since the COVID pandemic. The reason is obvious as stablecoins with the potential for global reach could help to address unmet demands by customers for faster, cost-effective and easy to access cross border payment services.
Amid this massive growth, the stablecoin community is setting up a global alliance in Geneva. Such an alliance, involving lead players, break the ice by creating a united front for the space to tackle key issues such as regulatory concerns and thus drive collaboration.
Dubbed the World Stablecoin Association (WSA), the union was launched by cryptocurrency exchange VirgoX and blockchain capital markets firm Global Digital Assets, or GDA Capital.
According to Adam Cai, CEO of VirgoX, the initiative would bring in true, unbiased global association composed of all major stablecoin projects.
The consortium aims to unite global business leaders, enterprises, community builders, and regulators together to promote the acceptance of stablecoins from both the retail and the institutional levels.
Numerous projects have already joined WSA in its incubating stages, such as the Canadian dollar-pegged QCAD as well as decentralized finance protocol Ren, that is backed by Polychain Capital. In addition to that, the Brazillian Digital Token (BRZ), Crypto BRL (CBRL), Peg Network, Stably, USDK are among the consortium members.
Also, the association is in discussion with major stablecoin providers including Tether (UDST), USD Coin (USDC), Dai (DAI), and HUSD, Adam Cai added. He saw lack of adoption of stablecoin initiatives as a major challenge for the industry.
“To encourage users to hold stablecoins as a means of storing value would also need projects to find various applications to generate values, such as interest-bearing products, like staking, etc.”
The member firms would initially be raising awareness of stablecoins globally through online and offline events as well as research on its use cases and enabling adoption across different industries.
If an amenable regulatory environment is implemented in the near future, the adoption of stablecoins as a payment option might boost above and beyond the current niche users. It is important to ensure that there is an appropriate regulatory approach within jurisdictions across sectors and borders.
The Financial Stability Board (FSB) published “high-level recommendations” addressing authorities at jurisdictional level to advance and push effective regulation and supervision of stablecoins. The G20 regulatory watchdog said in the statement, “Authorities should apply regulatory requirements to global stablecoin arrangements on a functional basis and proportionate to their risks.”
While international bodies such as G20 and Financial Action Task Force (FATF) are engaging in framing regulations to avert the risks, while reaping best benefits, it may be the right time for countries to hit the iron while its hot. They can provide a foundation layer that will help address real economic challenges, at the same time, generate greater value for digital assets ecosystem.
Establishing a stablecoin consortiums like WSA would promote the global development of stablecoins as well as actively engage in the advocacy of digital currencies.
“We believe an alliance/consortium/association of some kind, bringing the best projects globally together, could help set minimum compliance standards as well as help new projects to build those capabilities,” Roberto Durscki, COO of Stablecorp, that develops ‘QCAD’ which is a transparent and secure Canadian dollar stablecoin, told CoinTelegraph.
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Sujha has been writing and reporting on cryptocurrencies and blockchain technology developments since 2014. Her work has appeared in CoinDesk, CCN, EconoTimes and Fintech News Malaysia. She is also an accomplished Indian classical singer and loves baking cakes.
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