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Stablecoins: what could hinder their rise?
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Stablecoins are growing exponentially within financial markets. They are a type of cryptoasset whose value is pegged to fiat currency and is intended to remain stable allowing for usage as a payment instrument. The stability of their value is guaranteed through their reserve assets which must be invested in safe, non-volatile, liquid instruments. As a result, stablecoin holders are assured of the issuer’s ability to meet their at-par redemption requests. Under the current EU and US regulatory framework, stablecoin issuers are not allowed to grant interest to holders such that holders receive no return. This may become problematic, when compared with commercial bank deposits and money market funds.
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