Thursday, November 14, 2024
Members of The Digital Chamber (TDC) met with Federal Reserve Governor Michelle Bowman to discuss TDC's new stablecoin report | X/DigitalChamber

The Digital Chamber report: U.S. should use stablecoins to promote USD dominance in digital economy

The Digital Chamber (TDC) has released a report advocating for the United States to develop a comprehensive regulatory framework for stablecoins. The report emphasizes the importance of promoting U.S. dollar dominance in the digital economy while balancing innovation and consumer protection. TDC shared its findings on November 12.

According to NFX, stablecoins are cryptocurrencies pegged to fiat currencies such as the U.S. dollar (USD). Approximately 99% of stablecoin projects are currently linked to the USD.

In its report, TDC highlights that stablecoins are increasingly decoupling from the broader cryptocurrency market. Their adoption for non-crypto-related use cases, including savings, payments, and remittances, is growing. USD-linked stablecoins dominate the market by offering users stability and access to U.S. dollar benefits, particularly in emerging markets where local currencies may be volatile or unreliable. This trend presents an opportunity for the U.S. to maintain its global economic influence by integrating USD-linked stablecoins into the international financial system.

However, according to TDC's report, the U.S. lacks a clear regulatory framework for stablecoins, creating uncertainty for issuers and potentially hindering innovation. Other jurisdictions such as the European Union, United Kingdom, Singapore, and United Arab Emirates are proactively establishing regulations in this area, potentially positioning themselves as leaders in this emerging market. The report suggests that U.S. policymakers should learn from these international frameworks and prioritize developing a risk-proportionate and adaptive regulatory system that supports a diverse stablecoin ecosystem while preserving state-level regulatory regimes.

TDC offers several policy recommendations: allowing both banks and non-banks to issue stablecoins; requiring robust reserve requirements and redemption guarantees; and promoting interoperability between different stablecoin systems. The organization stresses the urgency for the U.S. to establish a clear framework to capitalize on opportunities presented by this rapidly evolving technology while safeguarding financial stability and reinforcing the global standing of the U.S. dollar.

According to its website, TDC advocates for pro-innovation policies in digital asset and blockchain industries. Its members include crypto exchanges, banks, consulting firms, and law firms.

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