As bitcoin, the world’s largest cryptocurrency, battles to rebound from a severe fall, regulators and the private sector have turned their attention to stablecoins, a subset of digital currencies.
Meta Platforms Inc has been testing its stablecoin payments wallet, while Visa, the world’s largest payments processor, has created a crypto advising service. Visa further added that stablecoins, rather than cryptocurrencies, may become the medium of exchange in the future.
Stablecoins are a type of virtual money with values tied to real assets like the US dollar or commodities, and their popularity has prompted central banks throughout the world to consider digital versions of their currencies. Visa’s action has been lauded by analysts at digital platform Alkemi Network as proof that the cryptocurrency and decentralised finance ecosystem is maturing. “As a movement within the crypto industry, making a visible attempt to play by traditional finance standards is undoubtedly getting pace,” they stated.
Last Monday, Japan’s financial authority announced that in 2022, it will issue guidelines restricting the issuing of stablecoins to banks and wire transfer companies.
In the United States, Treasury Secretary Janet Yellen and a group of bank CEOs debated the necessity to regulate stablecoins, even as top executives from leading cryptocurrency businesses like Coinbase and Circle pushed Congress to give clearer customised laws for the industry.
Novi, Meta’s cryptocurrency wallet, will allow users to send and receive money using WhatsApp, the social media giant’s messaging tool, and will use the Pax Dollar stablecoin. Stablecoins have increased significantly in the last month, according to Delphi Digital, with the market capitalization of the top five stablecoins rising to roughly $150 billion from $129 billion. Tether, the most valuable stablecoin, is worth $76 billion.
Meanwhile, after testing project Jura, named after the mountains that separate the two nations, the central banks of Switzerland and France declared success in Europe’s first cross-border experiment of central bank digital currency (CBDC) transfers.
A new breed of bargain hunter has then evolved. According to a research from Arcane Research, the number of active bitcoin addresses reached 1 million after the drop, the greatest level since the cryptocurrency plunged 35% in May. According to a poll of 500 worldwide institutional investors performed by Natixis Investment Managers, cryptocurrency topped the list of assets predicted to face a correction in 2022. In a separate Visa survey, 40% of worldwide crypto owners said they would transfer their primary bank to one that offers crypto-related goods in the next 12 months.
According to the Natixis poll, only four out of ten institutions consider bitcoin to be a viable investment alternative, despite the fact that 90% of those who have previously invested in crypto anticipate to keep or expand their allocation in 2022.
