Companies such as Walmart and Amazon are reportedly considering their own stablecoin initiatives, signaling a significant shift in how retail and financial services could operate in the future.
Businesses must navigate a labyrinth of strategic and technical challenges. One fundamental decision is whether to create their own stablecoin or to incorporate existing options.
The intended use of the stablecoin will reportedly have greater influence on this decision; for instance, a retail platform might develop a stablecoin to enhance customer engagement, while others could utilize them for internal cross-border transactions.
Stephen Aschettino, a partner at Steptoe, emphasized the importance of purpose in this decision-making process. “Is this something really designed to drive customers to engage with the issuer, or is the issuer’s primary motivation to have a stablecoin that is more ubiquitous?” he questioned.
Julia Demidova, head of digital currencies product and strategy at FIS, pointed out that stablecoins held on bank balance sheets might necessitate greater capital reserves under existing regulations.
“The GENIUS Act is great, but if the bank is treating their stablecoin on the balance sheet under prudential banking regulation, you still need to look at the risk weight of the asset,” she remarked.
However, banks may lean towards private, permissioned blockchains to ensure governance and control over transactions. Demidova noted that banks would likely prioritize clear structures and oversight, which are often lacking in public blockchain environments.
Despite the excitement surrounding the GENIUS Act, its effective date remains uncertain, with federal banking regulators expected to release rules that will clarify compliance and risk management requirements.
For instance, the Office of the Comptroller of the Currency (OCC) is reportedly anticipated to outline guidelines that will address these issues, while the Treasury Department will need to assess foreign dollar-pegged cryptocurrencies regulatory frameworks in line with US standards.
Featured image from DALL-E, chart from TradingView.com
