Public television's Independent Correspondent introduces stablecoins: The GENIUS Act and trends in international adoption.
The term 'stablecoin' began to attract increasing attention after U.S. President Trump signed the GENIUS Act. The latest episode of the public television program 'Independent Correspondent' introduces stablecoins to the public and invites experts and scholars to discuss why stablecoins could spark a financial revolution.
While many outsiders still do not know what stablecoins are, they have already become part of daily life in some regions, especially in countries where fiat currency values fluctuate sharply and access to the U.S. dollar is limited. Wen Hongjun, vice chairman of the Taiwan Fintech Association, stated that in Nigeria, over 60%-70% of the population uses cryptocurrency for payments.
However, according to inquiries from Crypto City, there has not yet been a public report clearly stating that the usage rate of cryptocurrency payments in Nigeria exceeds 60%-70%. However, reports from Chainalysis and surveys by Invezz indicate that from 2023 to 2024, stablecoin transaction volume in sub-Saharan Africa accounted for 43% of the region’s cryptocurrency transaction volume, with Nigeria being the largest cryptocurrency economy in Africa.
Image Source: Chainalysis. From 2023 to 2024, stablecoin transaction volume in sub-Saharan Africa accounted for 43% of its cryptocurrency transaction volume.
As of 2023, Nigeria’s cryptocurrency ownership rate reached 46%, ranking second in the world in terms of cryptocurrency adoption rates. From 2020 to 2023, Nigeria's cryptocurrency adoption rate surged by 15%.
This period coincided with the global outbreak of the COVID-19 pandemic. Huang Yaowen, co-founder and CEO of XREX, analyzed that the rapid increase in demand for stablecoins in emerging countries during the pandemic was due to their habit of converting salaries into U.S. dollar cash for value preservation, but during the pandemic, it became inconvenient to exchange for dollars, leading to a spike in demand for Tether ($USDT).
Further Reading:
XREX founder involved in money laundering receives deferred prosecution! Officials: 2 individuals have no substantial profits and will make a public donation.
Stablecoins vs. Traditional Cross-Border Payments: What are the Advantages?
Compared to the SWIFT system used in traditional cross-border payments, stablecoins operating on the blockchain have the advantages of settling in seconds to minutes, with transaction fees of $0.5 to $5.
Huang Yaowen pointed out that under the SWIFT cross-border payment system, a foreign worker from the Philippines working in Japan would need a remittance company in Japan and a cross-border remittance company in the Philippines. However, cryptocurrency payments can replace SWIFT's role, but the underlying technology does not use traditional remittance techniques; instead, it is U.S. dollar stablecoins.
The U.S. Congress recently passed three important cryptocurrency bills, with the GENIUS Act related to stablecoin regulation being the first signed by Trump.
Further Reading:
The dream has finally come true! Trump officially signs the GENIUS Act, the first stablecoin regulatory law in the U.S.
Wen Hongjun analyzed that Trump hopes all virtual economies will be priced in U.S. dollar stablecoins, and Wall Street financial institutions are also tokenizing financial products. When investors want to purchase these products, their TWD or other fiat currencies will be exchanged for U.S. dollar stablecoins.
Public television points out that by transitioning from physical to virtual, from off-chain to on-chain, the U.S. hopes to gain a voice in crypto finance through stablecoins and expand global demand for the U.S. dollar to solidify its dominance.
The world's largest stablecoin issuer has a massive scale, and the risks behind it cannot be ignored.
The global stablecoin asset scale continues to grow; as of today (July 31), it has reached $266.5 billion, with $USDT alone exceeding $160 billion, making it the largest stablecoin in the world.
It is worth noting that the issuer of $USDT, Tether, is a private enterprise, which ranks among the top 19 globally in terms of U.S. Treasury bond holdings.
Wen Hongjun pointed out that the stablecoin bill passed by the U.S. does not require 100% bank custody but mandates liquidity reserves. However, short-term U.S. Treasury bonds may be susceptible to runs due to single events. Huang Yaowen believes that short-term U.S. Treasury bonds are highly liquid assets with the U.S. government backing, which is significantly different from the resilience of banks, which can easily fail.
Even so, Tether, which holds over $100 billion, is ultimately a private enterprise, and risks still exist. Professor Chen Gujiao from National Ilan University stated that when a single private enterprise holds a large amount of U.S. Treasury bonds and the market becomes overly dependent on this company, if issues arise with the company's management team, the entire stablecoin market will be affected.
Latest data released by Tether shows that 81.49% of $USDT's reserves come from cash and cash equivalents and other short-term deposits, with 80.99% from short-term U.S. Treasury bills.
Image Source: Tether's $USDT reserves consist of 81.49% from cash and cash equivalents and other short-term deposits.
Challenges in Stablecoin Regulation: How to Effectively Control Criminal Misuse?
Regulatory issues in the stablecoin market also include misuse in fraud and money laundering channels. Huang Rencong, a former deputy director of the Criminal Investigation Bureau, stated that the proportion of criminals using cryptocurrency as a money laundering channel is increasing.
Chen Gujiao believes that for investigative units, the difficulty of tracing money laundering and cross-border controls will increase, and tax evasion may become harder to track. He noted that the application of financial innovation has already surpassed our imagination, and the government currently lacks the regulatory capacity in this area.
With major stablecoin companies based overseas, Taiwan's inability to regulate them could impact the central bank's operational objectives, including the ability to control monetary policy and interest rates. At this point, the government should consider whether to introduce a digitized TWD before the public widely accepts stablecoins.
How should stablecoins be regulated? Divergence in perspectives between the Financial Supervisory Commission and the Central Bank.
Currently, the Financial Supervisory Commission regards stablecoins as virtual assets, while the central bank sees them as payment tools, leading to differing legislative regulatory perspectives.
The central bank believes that stablecoins should be subject to the same regulations as existing electronic payments, following the principle of 'same business, same risk, same regulation,' to avoid regulatory arbitrage and unfair competition.
However, Tsai Yuling, honorary chairperson of the Taiwan Fintech Association, emphasized that fraud is a major challenge but should not hinder industry development, urging that legislation should be flexible, supporting a regulatory design authorized by the 'Virtual Asset Service Act' and subdivided into subordinate laws.
Further Reading:
Four Key Discussion Points from the Public Hearing on the Virtual Asset Service Act: How to Regulate Cryptocurrency Payments and Stablecoins?
The trend of stablecoins is unstoppable; scholars call for a national conference.
Chen Gujiao believes that stablecoins will bring significant and unknown changes, and a national financial conference should be convened on this matter:
'It is truly a financial revolution; we can choose not to participate, but others are advancing. It is necessary to engage with industry players, officials, and academia for discussions.'
Public television points out that stablecoins have become a trend, financial transformation has quietly begun, and as countries make arrangements, Taiwan must clearly understand its positioning to navigate the landscape steadily.
'Public television program discusses stablecoins! Professor: Taiwan should convene a national conference to keep up with the financial revolution?' This article was first published in 'Crypto City'.
