With the rapid rise of cryptocurrencies such as Bitcoin and Ethereum, stablecoins — cryptocurrencies that aim to maintain a stable value relative to another asset or pool of assets — have come under increasing heat from global regulators concerned about their risks to financial stability.
The total market value of stablecoins currently stands at over US$130 billion — more than the GDP of the North African country of Morocco — with Tether leading with a US$70 billion market value, followed by USD Coin at US$33 billion, according to CoinGecko data.
Stablecoins have been used to facilitate crypto trading and also serve as a fiat on-ramp pathway for crypto users seeking access to decentralized finance (DeFi). However, central banks and regulators have criticized these digital cash alternatives for posing a risk to the stability of the financial system. U.S. Securities and Exchange Commission chairman Gary Gensler recently likened them to poker chips and called them potential securities.