U.S. Government Gets Bad News On Stablecoins…

By Vince • October 24, 2023 4:00 pm • Comments

The United States is losing control of the stablecoin landscape.

According to a new report from Chainalysis, over half of all stablecoin transactions are now conducted on non-U.S. exchanges, that are not regulated by the U.S. government.

It should be noted that 9 out of 10 stablecoins at the time of this writing are USD-pegged stablecoins.

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This could potentially pose a massive threat to these markets, markets that are increasingly intertwined with the U.S. Treasury and bond market.

Coin Telegraph summed up the conclusion of the Chainalysis report: “US losing grip on stablecoin oversight as activity shifts to non-US-licensed entities.”

One member of the crypto community speculated: “If Stablecoins becomes [the] new Euro does the US Gov try to gain control of this new “Euro market”? I.e– US Gov goes after Binance plus Tether with the hope of Circle (US Based) becoming the “stablecoin winner” Not saying they can – but do they try?”

Chainalysis provided this data, and you can read their full report by clicking the link:

The majority of stablecoin inflows to the 50 biggest crypto services have shifted from U.S. licensed-services to non-U.S. licensed services, undoing a shift in the opposite direction that occurred over the course of late 2022 and early 2023.

As of June, a 54.6% share of stablecoin inflows to top 50 services were going to non-U.S. licensed exchanges.

Will Clemente explained: “At $120 billion in total market cap today, stablecoins are currently the 16th largest “sovereign holder” of US treasuries — which is wild considering the state of the crypto market. As demand for stablecoins grows, they will soon become too large for the US govt to let fail.”

Policy analyst at Chainalysis Jason Somensatto stated: “The US is losing its position as a stablecoin leader, and today we’re sharing new data about the offshoring of stablecoin activity. I’m also looking forward to discussing this data and the US approach to stablecoins at tomorrow’s State of Crypto 2023 in DC.”

Coin Edition added:

Chainalysis noted that U.S. lawmakers have not enacted stablecoin-specific regulations. It mentioned that the U.S. Congress is still considering related bills such as the Clarity for Payment Stablecoins Act and the Responsible Financial Innovation Act.

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