The stablecoin market in the United States may be slipping out of regulatory oversight, as highlighted in a recent report by blockchain research firm Chainalysis. The report, released on October 23, reveals that stablecoin activity is increasingly taking place through entities that are not licensed in the United States.
According to Chainalysis, the majority of stablecoin inflows to the top 50 cryptocurrency services have shifted from U.S. licensed services to non-U.S. licensed services since the spring of 2023. As of June 2023, approximately 55% of stablecoin inflows to these services were going to non-U.S. licensed exchanges.
This trend suggests that the U.S. government is losing its ability to regulate the stablecoin market, while U.S. consumers are missing out on opportunities to engage with regulated stablecoins. Chainalysis points out that although U.S. entities initially played a role in legitimizing and seeding the stablecoin market, more crypto users are now turning to trading platforms and issuers based abroad.
The lack of stablecoin regulations in the U.S. is attributed to the fact that lawmakers have yet to pass relevant bills, such as the Clarity for Payment Stablecoins Act and the Responsible Financial Innovation Act, which are still under consideration in Congress.
Despite the decline in licensed stablecoin activity in the United States, North America has emerged as the largest cryptocurrency market. Between July 2022 and June 2023, the region received an estimated $1.2 trillion in cryptocurrency transactions, accounting for 24.4% of the global transaction volume during that period. This surpasses the region of Central, Northern, and Western Europe, which received an estimated $1 trillion.
It is evident that the stablecoin market is undergoing significant changes, with the United States potentially losing its regulatory control. As the industry continues to evolve, it remains to be seen how U.S. lawmakers will respond and whether they will enact stablecoin regulations to regain oversight.
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