coindesk.com
The publication of the Treasury report, Report on Stablecoin (RoS), earlier this month is an “indication of urgency” for the regulation of stablecoins, given their potential to become a viable payments method, Bank of America said in a research note published on Tuesday.
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Institutions are waiting for rules to be defined before increasing exposure to digital assets, and a “regulatory framework should incentivize payments companies to integrate blockchain technology and stablecoins into their platforms,” the bank said.
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Mastercard, Signature, Visa and Western Union, all of which are buy-rated stocks in BofA’s research coverage, could see an increase in market value from stablecoin regulation.
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Oversight is needed for stablecoins, as they are now a “systemically important asset” with a market value of around $141 billion with quarterly transaction volume of over $1 trillion in 2021, the bank said.
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Despite the size and growth of the market, stablecoin issuers are not regulated under a sweeping framework and “provide varying levels of transparency into the composition of reserves that back their stablecoins,” BofA said in its report.
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The RoS notes that the “potential for rapid stablecoin growth creates systemic risk” as “digital assets and traditional financial markets are more connected than many realize.” The stablecoin report recommended swift action from the U.S. Congress and the passing of a legislation to integrate stablecoins into the banking system, allowing for federal oversight.
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If regulators decide that all stablecoin issuers are required to be insured depositories, this could lead to banks issuing their own stablecoins, the bank added.
Read More: Tether Reveals More Details About Its Reserves