Stablecoin Adoption Stymied by Fragmented Regulatory Regimes

Stablecoin adoption in international finance is limited by fragmented regulatory regimes, according to Juan Marchetti, director of the trade in services and investment division at the World Trade Organization (WTO). The constraint is not technology, but rather regulation and the lack of development of regulatory frameworks, Marchetti said.

The WTO's report on stablecoins in world trade found that only 39% of surveyed jurisdictions have finalized their stablecoin regulatory frameworks. This has hindered the growth of stablecoins, which currently account for just 3% of total international payments due to these fragmented regimes.

However, Marchetti noted that stablecoins may improve some of the main friction points of trade finance, including high costs, low speed, limited access, insufficient transparency and foreign exchange limitations. The WTO's report identified five such friction points that may be improved by stablecoin adoption.