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American Credit Ratings Firm S&P Global on U.S. Stablecoin Adoption
American credit ratings firm S&P Global recently discussed the potential impact of the Lummis-Gillibrand Payment Stablecoin Act on U.S. stablecoin adoption. The act aims to provide a regulatory framework that could significantly boost confidence in stablecoins and drive institutional usage.
Regulatory Framework Enhancing Confidence
In a research note, Andrew O’Neill, managing director at S&P Global’s Digital Assets Research Lab, highlighted that the act promises to introduce a legislative and regulatory framework that would not only bolster confidence in stablecoins but also accelerate institutional usage, facilitate bank issuance, and simplify digital custody services provision.
Encouraging Banks into the Stablecoin Market
The introduction of the Lummis-Gillibrand Payment Stablecoin Act on April 17 is expected to provide regulatory clarity that could encourage more banks to enter the stablecoin market. O’Neill pointed out that assuming the bill’s approval and subsequent banking regulations, banks could gain a competitive advantage, with institutions without a banking license limited to a maximum issuance of $10 billion.
Impact on Tether’s Dominance
One significant implication highlighted by O’Neill is the potential decline in Tether’s (USDT) dominance in the stablecoin market. As Tether is issued by a non-U.S. entity, it may not be considered a permitted payment stablecoin under the proposed bill. This could lead to reduced demand for Tether and a boost for U.S.-issued stablecoins.
Assessment of Tether’s Stability
S&P Global previously assessed Tether’s ability to maintain its peg to the U.S. dollar, giving it a ‘constrained’ rating of 4. Tether, being the longest-standing stablecoin with the largest volume in circulation, has faced scrutiny over the years due to limited information disclosure.
Potential Emergence of Custody Services
O’Neill also mentioned that the removal of the Securities and Exchange Commission’s requirement for custodians to report digital assets on their balance sheets could lead to the emergence of more custody services. This change could eliminate barriers and encourage greater competition in the market for digital asset custody services.
Ian is a cryptocurrency enthusiast blending humor with professionalism. With an engineering background and a storyteller's heart, he simplifies the blockchain world with sharp analysis and a touch of wit. At Cryptowire, he brings his unique perspective to make digital financial innovation accessible to all.
