According to Cointelegraph, governments outside the United States, including Singapore, are showing increased interest in stablecoins not tied to the U.S. dollar. Despite their limited liquidity, these non-dollar stablecoins are gaining attention due to sovereignty issues, as highlighted by Dea Markova, Fireblocks' director of policy, during an interview at Token2049. Markova noted that the competition with dollar-pegged stablecoins is primarily about sovereignty, drawing parallels to past tensions between governments and U.S. payment giants like Visa and Mastercard. She emphasized that stablecoins are emerging as a new area of sovereign concern, albeit on a smaller scale for now.
Markova pointed out that dollar-pegged stablecoins operating within the European Union are facing significant challenges, particularly from central banks. Despite being compliant and regulated, these stablecoins encounter resistance. The European Central Bank is pushing for the rapid development of a digital euro, citing the systemic impact of dollar-linked stablecoins within the eurozone as a concern. On April 29, the Bank of Italy released a report highlighting the potential systemic risk vulnerabilities due to dollar-pegged stablecoins' reliance on U.S. Treasury bonds. Currently, the market capitalization of stablecoins is dominated by dollar-pegged coins, with Tether’s USDT and Circle’s USDC accounting for a significant portion of the market.
Markova also highlighted the regulatory advancements in the United Arab Emirates, noting that the UAE is ahead in its regulatory thinking regarding stablecoins. She cited Abu Dhabi as an example, where the regulatory approach does not require stablecoin issuers to be domiciled or licensed locally, unlike in Europe. Instead, Abu Dhabi conducts due diligence on global stablecoins to determine if local exchanges can offer them, providing local businesses access to global liquidity and payments. In December 2024, USDT was approved as a recognized virtual asset in Abu Dhabi, followed by Circle receiving regulatory approval for USDC on April 29. Additionally, Abu Dhabi institutions are working on launching a regulated dirham-pegged stablecoin, further illustrating the region's proactive stance on stablecoin regulation.
