While supporters see stablecoins as a tool to enhance payment efficiency and reinforce US dollar dominance, opposition remains strong. Meanwhile, the European Central Bank is struggling to gain public support for the digital euro, as consumers show little interest in adopting a central bank digital currency. In contrast, stablecoin adoption in Latin America is surging, with USDC and USDT becoming preferred financial tools due to high inflation and economic instability.
Stablecoin Bill Faces Resistance from Bankers
The Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act is facing resistance from US bankers and their allies in the Senate, who are concerned that stablecoins could disintermediate traditional financial institutions and erode their market share. According to an article from American Banker, the bill requires 60 votes to pass, which means that it needs support from at least seven Democratic senators alongside Republicans.
This presents a bit of a challenge, as influential people like Senator Elizabeth Warren are still opposed to the legislation. Warren proposed an amendment that will prohibit tech firms from issuing stablecoins, and argued that only regulated financial institutions should have the ability to facilitate payments. She also warned that the bill disrupts the existing framework by allowing big tech and corporate entities to enter the stablecoin market.
Senate Banking Committee Chair Tim Scott, R-S.C., and committee ranking member Elizabeth Warren
The rise of digital assets fundamentally altered financial dynamics by offering near-instant settlement times and much lower transaction fees. Stablecoins, in particular, demonstrated their ability to reduce the costs of cross-border payments and facilitate direct peer-to-peer transactions. The GENIUS Act was introduced by Senator Bill Hagerty on Feb. 4, and it seeks to provide a clear regulatory framework for stablecoin issuance and integration in the US financial system.
The proposal attracted a lot of support from people like Federal Reserve Bank Governor Christopher Waller, who believes that non-bank entities should be allowed to issue stablecoins. Waller argues that stablecoins could enhance payment use cases, particularly in the developing world, by improving cost efficiency and accessibility. The potential benefits have not gone unnoticed in the banking sector either, with Bank of America CEO Brian Moynihan recently revealing that the institution is exploring the possibility of launching its own stablecoin.
Stablecoins are also getting recognition at the highest levels of government. During the first White House Crypto Summit on March 7, Treasury Secretary Scott Bessent pointed out that stablecoins could play a big role in maintaining US dollar dominance. Overcollateralized stablecoin issuers are now among the largest buyers of US government debt, ranking 18th globally and surpassing countries like Germany and South Korea in their purchases.
Policymakers advocating for stablecoin adoption argue that by implementing supportive regulations and promoting the global use of stablecoins, the US government can leverage them as a financial tool to absorb inflationary pressures and reinforce the dollar’s status as the world’s reserve currency. However, the ongoing political battle over the GENIUS Act also proves that there is still a deep divide between traditional financial institutions looking to protect their market dominance and supporters of digital assets.
ECB Struggles to Sell Digital Euro
Meanwhile, European consumers have shown very little interest in adopting a central bank digital currency, which raised some concerns for the European Central Bank as it prepares for a potential rollout of the digital euro. A recent ECB working paper on consumer attitudes toward a central bank digital currency surveyed around 19,000 respondents across 11 euro-area countries, and it revealed major communication challenges that are discouraging European households from embracing the digital euro. When asked to hypothetically allocate 10,000 euros across different assets, Europeans allocated only a small portion to the digital euro.
The March 12 ECB report found that Europeans strongly prefer existing payment methods and do not see a good enough reason to adopt a digital euro due to the vast selection of offline and online payment alternatives. The findings indicate that convincing consumers of the benefits of a CBDC will be a major challenge for policymakers, and will require a lot more research and targeted communication efforts. While the study suggested that introducing a digital euro will not disrupt financial stability, it shed some light on the fact that consumer habits pose a major hurdle to its adoption.
Reasons for not adopting digital euro (Source: ECB)
The report also pointed out the importance of strategic education efforts to address consumer reluctance. It found that European consumers responded positively to video-based education and training, which means that clear and concise communication through short videos could help shift public perceptions. Consumers who were exposed to video explanations about the digital euro’s key features were more likely to update their views and consider adopting the new payment method compared to those who received no such information.
The study was released at a time when US lawmakers are stepping up opposition to central bank digital currencies. At a House Financial Services Committee hearing on March 11, Representative Tom Emmer argued that Congress should prioritize stablecoin legislation while blocking any potential introduction of a US CBDC. Emmer described CBDCs as inherently un-American and insisted that unelected officials should not have the power to issue them. He also reintroduced the CBDC Anti-Surveillance State Act, which seeks to prevent future US administrations from launching a central bank digital currency.
Emmer speaks during the House Financial Services Committee Hearing
While resistance to CBDCs remains strong in the US, there are calls in Europe to move forward with the digital euro.
Stablecoin Adoption Surges in Latin America
Despite the US and Europe being hesitant to adopt stablecoins and CBDCs, stablecoin adoption in Latin America is on the rise as users increasingly turn to Circle’s USDC and Tether’s USDT for financial stability. This is according to a new report from cryptocurrency exchange Bitso.
The report revealed that stablecoins accounted for 39% of total purchases on Bitso in 2024, which was a 9% increase from the previous year. The growing reliance on stablecoins is attributed to economic instability in the region, particularly high inflation and currency devaluation, making USDC and USDT preferred stores of value.
Top 10 purchased cryptos on Bitso in 2024 (Source: Bitso)
While stablecoin purchases surged, Bitcoin trading on Bitso declined a lot, and dropped to 22% of total purchases from 38% in the second half of 2023. The report suggests that this shift indicates a growing preference for the hodl strategy, where investors accumulate Bitcoin for long-term gains rather than active trading. The decline in BTC purchases also coincided with the bull market of 2024, during which Bitcoin surpassed $100,000 for the first time in December. As Bitcoin buying slowed, stablecoin purchases increased, with USDC leading at 24% of total transactions, followed by USDT at 15%.
Top crypto assets by country (Source: Bitso)
Argentina was the strongest market for USDT, with the stablecoin making up 50% of all crypto purchases in the country. Given Argentina’s inflation rates, stablecoins have become an essential financial tool for local users. USDC purchases accounted for 22% of the country’s total crypto transactions, while Bitcoin purchases were only 8%, the lowest among the analyzed nations.
In contrast, Bitcoin was the most purchased cryptocurrency in Brazil and Mexico, where it accounted for 22% and 25% of total transactions, respectively.
This article was originally Posted on Coinpaper.com
