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    Stablecoins: Low Global Usage Attributed to Legal Uncertainties and US Dollar Dominance

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    Stablecoins represent only 0.2% of global transactions, despite their advantages such as cost-saving and faster processing, according to a report by Quinlan & Associates and IDA. Low usage is attributed to legal uncertainties and the predominance of US dollar-linked coins. Stablecoins make up about $200 billion in value, mostly tied to the US dollar. In response, a stablecoin linked to the Hong Kong Dollar is being developed. Proposed regulations and the demand for non-USD stablecoins could encourage broader use of this cryptocurrency.

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    Stablecoins are growing in popularity, but they’re not used that often for online shopping globally yet. Also, there aren’t that many of them that are linked to currencies besides the US Dollar, as per a recent report.

    Even though cryptocurrencies, including stablecoins, come with certain benefits like cost saving, more transparency, being available all time, and processing transactions quicker, they only make up about 0.2% of global online transactions, said the report by strategy consultancy Quinlan & Associates and blockchain developer IDA.

    Lawrence Chu, IDA’s CEO and founder, said with stablecoins, traditional financial systems lack the advantages that come with blockchain technology, like the ability to be programmed.

    But the problem is that most people still mainly use stablecoins in the Web3 ecosystem. The report said there are mainly two barriers to stablecoins being used more widely: people aren’t sure about the laws around them, and there aren’t many stablecoins linked to currencies other than the USD.

    Benjamin Quinlan, Quinlan’s CEO, said most people hesitate to accept stablecoins as a common payment method mainly because they aren’t sure about the laws. Plus, with most countries across the globe not using the USD, and around 40% of international payments made in non-USD currencies, there’s a clear need for more stablecoins tied to other currencies.

    As of now, stablecoins are worth about $200 billion, with pretty much all of it linked to the USD, according to data from CoinMarketCap. Tether (USDT) and USD Coin (USDC) are the most widely used stablecoins.

    Plans are being made to introduce a stablecoin linked to the Hong Kong Dollar (HKD) to help with payments between Hong Kong and other markets globally, Quinlan and IDA report.

    Interestingly, stablecoins seem to be increasing the demand for short-term US government bonds or Treasury bills, as per the US Department of the Treasury.

    The country’s previous Senator Pat Toomey mentioned on Nov. 20 that lawmakers might start looking into regulations for stablecoins in 2025. He believes there are some queries about stablecoin issuers that need to be addressed first, such as the required reserves, insurance on bank deposits, and which agencies should regulate them.

    There’s a bunch of legislation about cryptocurrencies that will be considered in Congress in the upcoming term, including Senator Bill Hagerty’s Clarity for Payment Stablecoins Act.

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