February 2025
Stablecoins, with their rapid growth and stability, are beginning to fulfil their potential in the evolving digital finance landscape. By virtue of the stablecoin peg to reference assets, typically fiat currencies, stablecoins are well positioned as a bridge between traditional finance and cryptocurrency. They facilitate mainstream adoption by mitigating some of the volatility commonly associated with digital assets and cryptocurrencies. With their unique structure of being pegged to stable assets, stablecoins offer significant potential for various real-world applications and for playing a vital role in the broader financial ecosystem. This stability makes them suitable as collateral, reducing market risk during transactions, which enhances their utility in efficient settlement, market access, and smart contract programmability. These benefits are further amplified when combined with the broader efficiencies of toke-nisation, digital representation and atomic settlement.
By September 2024, the global market for stablecoins stood at approximately USD $172 billion (CoinGecko, n.d.), with a high concentration of market share among a few dominant issuers. This growth underscores the urgent need for robust regulatory frameworks and best practices to ensure stability and prevent risks that could disrupt the broader financial system.
Two pressing questions arise:
• What safeguards need to be adopted as we incorporate stablecoins into the financial ecosystem?
• How can ecosystem partners build cohesive best practices to ensure a secure and sustainable path forward?
In response to the evolving stablecoin landscape, Ripple and StraitsX hosted a roundtable as part of the Global Finance & Technology Network (GFTN)'s by-invitation-only Insights Forum 2024. The roundtable brought together regulators, standard setting bodies, stablecoin issuers, and enterprise technology providers to discuss the future of stablecoins and the necessary best practices for their safe and effective integration into the financial system. The roundtable was supported by a Stablecoin primer for issuers and users published by the Blockchain Association of Singapore (BAS), Ripple and StraitsX (2024), which explores stablecoin types, benefits, risks, and real-world use cases, with a focus fiat- collaterised stablecoins given the existing regulatory perimeter.
This report distills five key takeaways from the roundtable discussion, each offering actionable steps for establishing a trusted and sustainable ecosystem for fiat-pegged stablecoins:
• Fostering a global regulatory framework with local adaptations;
• Operational excellence for issuers;
• Building a compliance-first culture;
• Safe custody practices for enterprise users; and
• Enhancing the user experience to drive institutional adoption.
As the ecosystem continues to explore the benefits and wide- ranging applications of stablecoins, the importance of setting standards that balance innovation, trust, and consumer protection has become critical. Without a concerted effort from regulators and the wider industry to build robust frameworks, risks such as potential market disruptions, security vulnerabilities, and challenges in cross-border compliance could undermine the potential of stablecoins. Establishing a sound regulatory foundation now will mitigate these risks, fostering growth and trust in the stablecoin sector and ensuring its role as a reliable pillar within the broader financial landscape.
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