Stablecoin exodus: Why are investors fleeing crypto’s safe haven?

In a year filled with uncertainty in the cryptocurrency space, a new trend has been unraveling: a stablecoin exodus that has now lasted for 18 consecutive months and has seen the market dominance of stablecoins drop to 11.6%.

According to a report from CCData, the total market capitalization of the stablecoin sector in July was $124 billion amid a 18-month decline that affected most major stablecoins. While Pax Dollar (USDP), USD Coin (USDC) and Binance USD (BUSD) all saw declines, the largest stablecoin by market cap, Tether (USDT), has kept on growing.

Stablecoins are a class of cryptocurrencies that attempt to maintain price stability through a variety of methods. Most leading stablecoins are backed by fiat currencies, although others are backed by cryptocurrencies or commodities, or are based on algorithms.

The reasons behind the recent exodus aren’t entirely clear and could be multifaceted.

The suspension of fiat currency deposits on Binance.US following a lawsuit from the United States Securities and Exchange Commission alongside MakerDAO’s move to drop USDP from its reserves as it failed to accrue additional revenue impacted the sector.

Stablecoin trading volumes rose 10.9% to $406 billion in August, but activity on centralized exchanges is struggling, with overall trading volumes “on track” to continue to decline in September, per the CCData report.

CCData’s report points to the SEC lawsuits against leading cryptocurrency exchanges Binance and Coinbase and the race to list a spot Bitcoin (BTC) exchange-traded fund (ETF) as factors contributing to the increase in stablecoin trading volumes.

These factors suggest stablecoins are still acting as safe havens for investors, meaning the exodus could be related to other factors, such as investors cashing out their stablecoins to buy traditional assets as they exit the cryptocurrency space or to take advantage of rising yields in fixed-income securities.

The yield on 10-year U.S. Treasurys, for example, has been surging as the Federal Reserve raises interest rates in a bid to curb inflation. While the yield on these notes was at one point below 0.4% in 2020, it’s now at 4.25%.

Kadan Stadelmann, chief technology officer of blockchain platform Komodo, told Cointelegraph that one of the reasons investors are buying Treasury bills is the “greater certainty behind them.” Even though governments “like the U.S. might face significant debt trouble, they are still considered to be stable by the vast majority of people.” Stadelmann added:

“Meanwhile, stablecoins are perceived as riskier because the crypto market is still largely unregulated. Additionally, stablecoin returns aren’t fully guaranteed. This means if interest rates are comparable between both options, investors are more likely to choose T-bills over stablecoins.”

Digging deeper, the drop in the market capitalization of the stablecoin sector could significantly influence the broader cryptocurrency market. Stablecoins are often used as a medium of exchange and a store of value in crypto transactions, meaning that if demand for stablecoins decreases, it could reduce the liquidity and efficiency of the crypto market as a whole.

Circulating stablecoin supply exploded long-term

While the total market capitalization of the stablecoin sector has been declining for 16 consecutive months, CCData’s report detailed that trading volumes have not suffered the same fate.

Speaking to Cointelegraph, Becky Sarwate, head of communications at cryptocurrency trading platform CEX.IO, pointed to several changes in the stablecoin sector, including USDT’s rise and a slight drop seen in August, that have historical precedent and demonstrate an increase in demand.

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Sarwate noted that several projects experienced “noticeable fluctuations this year,” with USDC, for example, depegging following the collapse of Silicon Valley Bank in March after it was revealed Circle had $3.3 billion stuck in the financial institution. She said this “likely set the table for Binance to pivot its holdings from the stablecoin into BTC and ETH.” Sarwate added:

“At the same time, USDC’s ubiquity in the DeFi space has long nudged other stablecoins like Dai to the periphery due to its overcollateralization requirements.”

She also pointed out that Binance’s flagship stablecoin, BUSD, has continued declining after Paxos was forced to stop issuing new tokens. Binance has since adopted TrueUSD (TUSD) and First Digital USD (FDUSD), which “both saw increased market capitalization of roughly 240% and 1,950%, respectively, in 2023.”

Thomas Perfumo, head of strategy at cryptocurrency exchange Kraken, told Cointelegraph that the market capitalization for stablecoins “corresponds with market demand,” adding:

“Over the last three-and-a-half years, circulating stablecoin supply has grown from ~$5 billion to ~$115 billion, signaling a massive growth given the attractiveness of hedging volatility and the flexibility of global, 24/7 transferability.”

Peli Wang, co-founder and chief operations officer of Bracket Labs — a decentralized finance options exchange — noted that leading stablecoins USDT and USDC registered a 23% drop in their market capitalization from June 2022 to September 2023, compared with the 66% drop from $3 trillion to around $1 trillion the cryptocurrency space suffered from November 2021 to September 2023.

To Wang, many cryptocurrency investors are “highly opportunistic in the sense that they follow where the yield is going.” After taking advantage of better yield opportunities in crypto when traditional finance had low interest rates, they are now moving to traditional finance as its rates have increased.

Following the yield

Wang isn’t alone in this analysis: Kraken’s Perfumo told Cointelegraph that it’s “possible that the decline in stablecoin supply is related to the attractiveness of other cash equivalents that earn higher interest, including government bonds.”

Perfumo added that the Federal Deposit Insurance Corporation has reported U.S. banks lost more deposits “than any time in the last four decades” amid rising yields, presumably as the funds are moved to Treasurys or money market funds offering better yields.

Pegah Soltani, head of payments products at fintech firm Ripple, told Cointelegraph that back in 2020, when interest rates in traditional finance were low, there were “little opportunity costs of holding money in non-yielding stablecoins because Treasurys and other fixed income securities yield near 0%.”

As interest rates rose, Soltani added, holding onto stablecoins over yield-bearing instruments became less attractive:

“Now that Treasurys are +5%, there are real costs to holding assets in stablecoins over Treasurys. Risk is a more obvious factor, but economic dynamics are likely playing a bigger role in market capitalization highs and lows.”

To CEX.IO’s Sarwate, there’s “no question” that higher interest rates made traditional finance more attractive to investors seeking fixed income. Stablecoin adoption, she added, was initially a “convenient on-ramp for crypto-curious participants to access more advanced services in the digital economy.”

Tokenized fiat currency

2023 saw major stablecoins USDC and USDT depeg at some point, which wobbled investor confidence. Pairing this with the recent collapse of cryptocurrency exchange FTX and of the Terra ecosystem — which included an algorithmic stablecoin that lost nearly all of its value — it becomes clear the stablecoin market has faced serious challenges that remain fresh in the minds of many industry participants.

Sarwate concluded that these industry participants want to feel secure while seeing their investments grow, which means that until stablecoins can “meaningfully address these two concerns, we’ll likely continue to see underwhelming or lackluster performance for this specific use case.”

On whether the move to fixed-income securities was temporary or indicative of a long-term trend, Soltani told Cointelegraph that tokenized assets like fiat currencies have “greater utility over nontokenized ones,” especially if issued on high-performance blockchains:

“Tokenized fiat is the future — whether it’s issued by a bank, Circle, Tether or others still remains to be seen. Whether it be in the short-term or long-term, the move to Treasurys is indicative of economic and regulatory success.”

If stablecoins offered the same yields as Treasurys while remaining just as compliant, she added, many cryptocurrency users would likely want to hold their assets in stablecoins, which are easier to move and trade.

Put simply, the incentive to hold stablecoins has seemingly been dropping, while the incentive to hold cash and other fixed-income securities in traditional finance has been growing.

Could PayPal’s stablecoin turn things around?

In August, global payments giant PayPal unveiled a new stablecoin called PayPal USD (PYUSD), an Ethereum-based, U.S. dollar-pegged stablecoin issued by Paxos and fully backed by U.S. dollar deposits, short-term Treasurys and other cash equivalents.

The stablecoin is the first one carrying the weight of a major U.S. financial institution, which could potentially boost investors’ confidence in it. Others, as CEX.IO’s Sarwate pointed out, are weary of its centralized nature and have raised concerns over some controversial features it has, including address-freezing and fund-wiping.

Sarwate added that there are “many who view such overarching control as being antithetical to crypto’s promise,” something that, to her, could explain why PYUSD has struggled to gain traction so far.

PayPal’s stablecoin could nevertheless help the sector recover, even if by bringing in new users who had never used cryptocurrency before. Speaking to Cointelegraph, Erik Anderson, senior research analyst at ETF firm Global X, suggested PYUSD could be lowering the barrier of entry for crypto:

“We believe PayPal’s launch has the potential to make the technology feel more accessible and less intimidating to a massive user base (approximately 430 million-plus active users), which can be a great thing for adoption.”

Sarwate seemingly agreed with the assessment, saying that PayPal’s name being behind a stablecoin could “be a selling point for newcomers to the space and help establish PYUSD as a gateway crypto.”

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Ripple’s Soltani echoed the sentiment, saying that if the stablecoin is listed and available in the broader cryptocurrency ecosystem while being accepted by merchants working with Tether, it can “create material inflow to stablecoins and significantly change existing market shares.”

To Soltani, the stablecoin market will naturally “consolidate down to a few trusted names,” as otherwise “liquidity would be too fragmented.”

At the end of the day, it appears the stablecoin exodus is caused by a relatively stable cryptocurrency market and a flight to yield-bearing assets that investors feel safe holding onto while the cryptocurrency market consolidates.

Whether stablecoins will start offering exposure to yield coming from the fixed-income securities backing them or whether the on- and off-ramps will become so seamless and efficient that the market will begin to fluctuate heavily remains to be seen.

Cryptocurrency markets’ low volatility: A curse or an opportunity?

Cryptocurrency markets are well-known for their volatility, where large price swings help investors create or lose fortunes. Yet there are often periods of relative stability where the tight price action bores some while being an opportunity for others.

Since the beginning of the year, Bitcoin’s (BTC) price has soared by over 60%, climbing from around $18,000 to over $27,000 at publishing time. However, the cryptocurrency has been stuck in a narrow range for the past two months, fluctuating between $26,000 and $29,000. It has occasionally attempted to break out above $30,000 but also faced some dips to $25,500.

According to CCData, Bitcoin’s volatility has dropped to 48.2% this year from 62.8% last year and from 79% in 2021. The cryptocurrency’s average daily change so far this year has been steady, with gains of 1.68% and losses of 1.93%.

Investors have a number of options at their disposal to generate more during periods of low volatility, including simply lending their tokens out via decentralized finance (DeFi) protocols or through centralized exchanges. Other alternatives include staking and advanced strategies using derivatives like options and futures.

Given the highly volatile nature of the cryptocurrency sector, this tight trend is interesting. Similarly stable periods in the past have been followed by significant price movements, either to the upside or the downside, but stability doesn’t mean there aren’t strategies that can help boost investors’ returns.

Crypto traders are expecting low volatility

While the most often-used strategy during these periods is to just hodl tokens while waiting for green candles, there are numerous strategies that can be used during sideways markets, including some market-neutral approaches that allow investors to take advantage of these periods, especially if they suspect when they might end.

Speaking to Cointelegraph, David Duong, head of institutional research at Coinbase, noted that the tight price action in the cryptocurrency space was partly driven by a sharp United States dollar retracement, with many traders sitting on the sidelines “waiting for a clear trend to emerge.”

Duong added that “many digital assets are still trading within well-defined ranges,” stating:

“If we look at the options space, we have seen implied volatility soften to some of the weakest levels in recent memory. For example, the 1M ATM 30D [one-month at-the-money 30-day] implied volatility for both Bitcoin and Ether are now near 41% as of May 30, almost 10 volume points lower than they were one month ago.”

The Coinbase executive’s statement points to low market expectations of significant price swings for both Bitcoin and Ether (ETH). Duong reiterated Coinbase’s stance that it’s “constructive on Bitcoin and the wider crypto market over the next six to 12 months, based on our Fed and macro views.”

Ahmed Ismail, CEO and founder of crypto liquidity aggregator Fluid, told Cointelegraph that during these periods, range trading is a “particularly attractive strategy” that aims to “take advantage of price oscillations, and tight price action can provide more precise entry and exit points for range traders.”

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Ismail added that flat price action tends to “recede periods of extreme price moves triggered by big events” and noted traders are eyeing multiple potential catalysts, which include the potential collapse of regional U.S. banks and the Federal Reserve’s upcoming decision on short-term interest rates.

Becky Sarwate, head of communications and brand at cryptocurrency exchange, pointed out that periods of “stablecoin-like activity can invite a reflective period for traders to reevaluate their approach or consider alternative pathways through the ecosystem.”

Sarwate added that Bitcoin has similarly consolidated and saw its volatility drop in January 2023 before breaking out, although she warned traders “should always be cautious to chase the memory of historical events,” concluding:

“While it can be tempting to look for familiar patterns, it’s important to remember that market conditions are always in flux and can not be relied upon to replicate.”

Konstantin Horejsi, chief product officer at cryptocurrency exchange Blocktrade, said that such tight price action affects short-term trading activity, but told Cointelegraph that those who “believe in the long-term value proposition of digital assets” are still holding onto them or adding via dollar-cost averaging strategies.

While traders expecting lower volatility may have an impact on trading volumes, it doesn’t necessarily mean things aren’t happening as there are numerous strategies that can be used during these periods.

Managing risk during sideways markets

When asked what strategies can be used to manage risk during periods in which the market keeps moving sideways,’s Sarwate said that price consolidations and bear markets “can become timely moments to revisit and potentially rebalance one’s crypto portfolio.”

To Sarwate, these periods of relative stability can “provide the breathing room necessary to make tactical decisions.” Traditional and liquid staking opportunities’s market research team has been tracking, she added, have led to increased network participation that’s “measurable across a breadth of wallet denominations” as staking services can “offer intuitive on-ramps for participants looking to explore the digital economy.”

Tools like stop orders may lose their effectiveness during these periods, Sarwate said, while liquidity shortages “can risk leaving some actions unfulfilled.” As such, it’s important to have a firm grasp on resistance and support levels, she stated.

Ismail said that it’s important to calibrate risk by “determining what portion of your portfolio you wish to allocate to crypto for the long term” and suggested the best strategy was to just keep accumulating:

“The best strategy for an average crypto investor is to dollar-cost average, or DCA, over time. Instead of trying to time the market by predicting the price moves, build up a solid position in your preferred crypto by regularly investing a fixed sum regardless of current market conditions.”

Increasing cash allocations, he said, could also be viable. More sophisticated traders can nevertheless find opportunities in options even when prices are stagnant, Ismail added, noting that “only a small percentage of options traders make money.”

Managing risk is “an ongoing process” so investors should “regularly evaluate and adjust” their risk management strategies while reviewing their portfolios as market conditions change.

Speaking to Cointelegraph, a spokesperson for leading stablecoin issuer Tether said that during periods of tight price action, risk management can “involve diversification across different assets, employing stop-loss orders and monitoring market indicators for potential shifts.”

Managing risk is clearly a priority when markets give investors some time to breathe, but as the dust settles, it may be hard to tell if and when things are going to become more volatile again.

Potential breakout indicators

The Tether spokesperson said that investors should look for indicators such as “increased trading volume, volatility expansion or significant news or events that may precede a breakout from tight price action not only in the crypto market but also in the traditional financial markets.”

Ismail corroborated that volume is something to keep an eye on, as “increasing trading volume suggests market participants are becoming more active, which tends to accompany price movements.” Technical analysis such as chart patterns, he added, could also provide clues on a potential breakout.

Looking at potential signs of a breakout, Sarwate dug deeper, pointing out that on-chain anomalies can often attract attention during these periods. Outsized spikes in key variables or heightened activity could “read as gesturing towards a pending action,” she said, adding:

“Traders will often have a unique combination of metrics, or a specific trend they monitor that signals to them when something’s moving in the water. However, any such hunches should be rigorously investigated and ideally cross-referenced as much as possible to ensure their validity before committing to a course of action.”

While traders rely on these metrics to help them attempt to time the market — something many have warned against — they may also use the time they have to wait to capitalize on their holdings.

Using market-neutral strategies

Market neutral strategies, or those that aim to generate returns while minimizing exposure to overall market movements in a bid to reduce the impact of volatility, can be considered during these periods, according to Tether.

These strategies can be as simple as staying on the sidelines holding onto stablecoins and generating revenue by lending them, or they can be rather complex. More advanced strategies involve, for example, selling covered calls, which according to Fluid’s Ismail can be “really beneficial during periods of tight price action.”

Alexia Theodorou, lead product manager at Kraken Futures, told Cointelegraph that crypto derivatives can be used to “navigate both bear and sideways markets,” with short-selling allowing investors to use falling prices to their advantage, potentially also creating hedging strategies for their positions.

Theodorou said that if a trader, for example, holds BTC, they can use it as collateral on a short futures position. This short position will gain if the price of the underlying BTC price drops, effectively protecting the trader from the falling price. Theodorou added:

“Similarly, traders can develop positions consisting of a combination of long and short contracts in assets with similar rates of return — a correlation coefficient — to mitigate exposure to market fluctuations and periods of high volatility. Called a market neutral strategy, the aim is to generate returns regardless of overall market direction.”

Crypto derivatives, she said, are ultimately a tool that encourages better price discovery and helps “lead to more efficient and liquid marketplaces.” 

Options strategies can offer investors similar market-neutral strategies. Covered call options, for example, see the owner of an underlying asset sell call options to collect premiums while limiting their downside. The call option gives the buyer to right to buy the asset within a certain period. As the seller of the call holds the underlying asset, if the option is exercised, they sell their assets at a predetermined price.

These covered call strategies, Ismail said, are “actually used as part of a risk management approach during such a time, but they may not be ideal if there are breakout expectations.”

However, he added that there are other suggestions out there:

“Other strategies that investors can use include Bull Call Spreads, Short Iron Condors and Short Iron Butterflies. But for these strategies to work, a trader must have a solid understanding of options trading and the associated risks.”

A solid understanding is an understatement, as often even experienced market participants fail to see every possibility. Market-neutral strategies, nevertheless, are attractive, and their options are growing in the space.

Indeed, in July 2022, for example, Coinbase published a blog post showing how perpetual futures contracts could be used to “achieve a high return on investment” by taking advantage of “positively skewed funding rates” in the market.

While these strategies can be attractive during periods of low volatility, there are inherent risks associated with them. Coinbase’s blog post mentions the use of perpetual contracts on FTX, a platform that has since collapsed. Other risks include a potential surge in volatility, risks associated with a platform getting hacked and regulatory risks.

Investors looking for added returns are encouraged to do as much research as possible when exploring their options. Another option to consider is an added return a boost in security practices that helps keep tokens away from hackers.

What happens after Bitcoin trades like a stablecoin?

Asked about his potential outlook for Bitcoin and the wider cryptocurrency market over the next six months, Ismail noted that the market is “searching for its next price catalyst,” as market conditions show “investors are accumulating BTC at lower levels.”

He speculated that as market sentiment shifts, there’s an increased likelihood of a significant price movement, especially taking into account the halving event in the first half of next year. Ismail added:

“With Bitcoin remaining the main driving force behind the industry, the movement of the largest crypto will determine the fate of altcoins and the broad market.”

Sarwate said there is a “palpable optimism in the crypto space” despite the increased regulatory scrutiny. This year has been a “steady stream of inspiring technological breakthroughs and discoveries that are reinvigorating the digital asset space,” she said.

She noted that when it comes to Ethereum, thriving layer-2 ecosystems are improving its functionality, while the recent Shapella upgrade enabled staking withdrawals in just “one in a series of success improvements that are setting off waves of positivity within the community.”

As for Bitcoin, Sarwate pointed out that Ordinals inscriptions are “kicking up a lot of dust as individual satoshis have taken center stage in the NFT debate.” On top of that, Bitcoin’s next halving event is occurring next year, she said, which is helping generate and restructure debates about its future.

So, what does all of this mean for long-term investors? According to Ismail, a lot of those with a strong conviction may “end up puking their positions after holding through 70% to 80% drawdowns.” While he said it’s important to take profits, investors should avoid panic selling and always have an exit strategy.

The market cycles need to be kept in mind, he said, adding:

“While in bull markets, it may feel as if the market will only go up and that this time is different, but once the bear markets hit, prices may fall 90%. Both market states are not permanent.”

Some long-term investors understand this and view tight-range trading periods as “an opportunity to add to their positions at discounted prices.” Per Ismail, the key is not to use leverage and survive these “boring times.”

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Horejsi seemingly concurs, stating that those who have survived one or two bear markets already know “where to set limits and have probably set them long ago.”

“Also, most long-termers didn’t go all-in with leverage but have some more conservative investments, too, so the immediate need to liquidate isn’t that strong.”

As regulatory clarity improves and cryptocurrency adoption grows, he said, he feels safe to say that crypto is “here to stay.” For those who do believe that it is here to stay, waiting out less-volatile periods may be the way to go, whether they choose to accumulate more or not.

If they opt to lend, take advantage of market-neutral strategies or simply hodl in cold storage, their choices are to be based on individual risk appetites. Surviving bear markets is what helps investors benefit from bull markets, after all, so whatever helps get through the red candles and avoids losses is seemingly an option.

AI financial tools: A smart way to manage money or a risky experiment?

The ever-evolving financial sector has been seemingly attracting cutting-edge technology over the last few years, with blockchain technology and digital currencies trying to help traditional finance evolve for over a decade. Now, artificial intelligence (AI) is bringing in new tools.

AI tools like ChatGPT and Bing Chat have shown an impressive capability to help boost efficiency, to the point 7,800 jobs at IBM are at risk of being replaced by AI within years, according to the company’s CEO. This technology manages to boost efficiency by being able to churn through colossal data sets in little time and bring in valuable insights that humans would take hours or days to recover.

Machine learning, a subset of AI that helps computer systems learn from data and improve in a system that mimics human decision-making, has been in use for years by several high-profile financial institutions that are harnessing the power of AI.

In its 2022 annual report, trading platform Robinhood noted its machine learning models are “highly advanced and contribute to multiple capabilities across our business.”

Earlier this month, major cryptocurrency exchange announced the launch of “Amy,” a generative AI user assistant built to inform users about the crypto industry. Similarly, Binance launched an AI-powered nonfungible token (NFT) generator that minted over 10,000 tokens in less than three hours.

While these developments are exciting, AI-powered tools may not yet be ready for a retail audience, as they cannot fully support an individual during financially challenging times. On top of that, algorithmic bias is a legitimate concern that has been raised by various experts, as AI may unintentionally favor or disadvantage potential ideas based on bias carried from its model.

AI’s effects on the retail finance sector

Some basic AI financial tools are already being used in the retail finance sector, including the above-mentioned AI-powered NFT generator Binance launched and’s Amy chatbot.

Other tools meant to scrape financial social media for sentiment indicators and trends have also been launched, as have tools made to simplify analyses of financial reports.

Speaking to Cointelegraph, Robert Quartly-Janeiro, chief strategy officer of cryptocurrency exchange Bitrue, said that new AI tools are “part of the future far beyond” its current uses. He added that businesses will use these tools if they save money, although customers “prefer to deal with humans, be it in-branch, online or on the phone.”

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Asked about the potential for AI to transform the retail finance sector in the next few years, Quartly-Janeiro said he “hopes it doesn’t,” aside from creating “fairer lending decisions, more open-mindedness on consumer credit to increase access to finance, and better risk management parameters.”

He added that consumers and the billions of decisions they make “drive economies and their growth,” cautioning:

“If you replace humans on a large scale with a machine that doesn’t buy, sell, invest, lend, borrow, then you have a serious problem on your hands; temporary profitability isn’t worth the risk of mass employment displacement.”

Chris Ainsworth, CEO of investment service Pave Finance, which uses AI to monitor market conditions and personalize portfolios, told Cointelegraph he does not believe AI financial tools are currently ready to be used in the retail sector without oversight.

According to him, current AI tools can “deviate from their intent fairly quickly,” and it will “take much longer than people think to fully deploy AI without oversight.” Ainsworth added that oversight is needed to “ensure models are adjusting properly, given volatility, correlations and the dynamics of markets changing quickly.”

He said that, in the future, AI tools will help drive down costs for the retail finance sector, although without proper oversight AI-driven models will not account for markets that can be driven by human emotion.


Ahmed Ismail, CEO and founder of AI-powered crypto liquidity aggregator Fluid, told Cointelegraph that AI tools are “mature enough to assess and manage risk, detect and prevent fraud, make effective credit and trading decisions, offer round-the-clock interaction and communication services, automate recurrent processes and reduce the scope of human error.”

Ismail added there’s nevertheless always a chance to improve, especially when it comes to preventing cyberattacks and safeguarding private data. Per his words, AI will play a transformative role in shaping the retail finance industry and will “shift paradigms” in trading, personalized banking, underwriting, financial advisory and more.

According to Ismail, numbers suggest that more than half of financial organizations with over 5,000 employees have already adopted AI, citing Bank of America’s chatbot Erica and Capital One’s natural language SMS text-based bank assistant Eno as examples.

While so many financial institutions are bringing AI tools to a retail audience, there are numerous challenges to overcome on several fronts. While concerns surrounding the technology abound, privacy and regulatory concerns are also worth considering.

Avoiding hiccups when implementing AI in finance

Bitrue’s Quartly-Janeiro said that financial institutions implementing retail-focused AI solutions also have to consider the implementation, adoption and cost benefits of their decisions, with the risks being “far more complicated,” as once they hand control of a function to AI, it isn’t clear how they’ll reclaim it.

He noted J. Robert Oppenheimer who, after perfecting the atomic bomb during the Manhattan Project, became a prominent proponent of banning nuclear weapons. Numerous high-profile individuals, including Tesla’s Elon Musk and Apple’s Steve Wozniak, have asked for a pause in the development of AI technology.

Fluid’s Ismail pointed to a different challenge — the “presence of human bias in data used to train AI,” which he said may lead to “embedded bias in AI algorithms.”

“These biases may lead to the exclusion of specific customer segments, inefficient operations or process mechanisms and a lack of trust in the technology.”

To Ismail, the predictive models used in making the technology work must also be “free from modeling pitfalls as realistically possible,” while cybersecurity and data privacy issues “should also be seriously considered.” AI-powered financial service solutions could “fall prey to data poisoning attacks, input attacks or model extraction or inversion attacks.” 

He concluded, “The fast transformation of such a large market — as financial services and advisory are — to AI-based providers may affect the system’s stability by making it vulnerable to a single point of failure.”

Maya Mikhailov, founder of AI app tool Savvi AI, told Cointelegraph that when implementing AI, financial institutions must consider data security and privacy and follow applicable local data collection and storage laws.

Mikhailov added it’s also essential they have “transparency and audibility for the models that they are deploying,” as regulators will not accept them not knowing how their model works in case their AI programs end up violating lending or other local laws.

Their reputation may also be tied to the accuracy of the results provided by the AI tool, meaning they must be diligent and stop the program from hallucinating and giving customers inaccurate or harmful advice.

Taking all of this into account, it isn’t clear whether major financial institutions will have retail-ready AI tools in the near future. Smaller projects are likely going to be launching these tools as they can, as they don’t have to worry about reputational risk.

Is AI going to replace human financial advisers?

The jury is still out on whether these retail-ready AI tools will be able to outperform the market, suggest different strategies based on an individual’s profile, or replace human financial advisers.

To Mikhailov, retail AI-based financial tools may end up replacing human advisers at the “lower end of the market” to offer more “mainstream advisory tools to larger audiences.”

“A smartly deployed AI program will augment human, financial advisers with tools they can use to quickly and efficiently provide the strongest recommendations for their client’s portfolios.”

Fluid’s Ismail noted that there are “conflicting opinions among industry experts and analysts on whether AI will ever fully replace human advisers. AI’s advantages of AI over human-led services are evident.”

He added that AI can manage financial matters in real-time and offer “a more tax-efficient advisory service,” stating, “AI-powered decisions are also expected to be more immune to faults than those taken by human advisers. Commission expectations will not drive these AI-powered decisions and be free of biases towards or against a specific customer segment.”

Pave Finance’s Ainsworth said that human financial advisers may end up being replaced but added that such a possibility is “likely much further out than people think,” as by then, AI “will need to account for human emotion, which will be difficult.”

Caleb Silver, editor-in-chief at financial education portal Investopedia, told Cointelegraph that AI may “never be able to replace the personal touch that financial planning and advice requires for some clients who have complicated financial needs.”

He said that clients aren’t just looking for portfolio allocation and investment strategies but want “holistic financial planning and advice that is customized for them, and that requires a level of multidimensional thinking and execution that software alone isn’t yet capable of providing.”

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Even if AI never replaces human advisers, it may still help democratize access to financial knowledge and services and aid crypto’s ethos of banking the unbanked. Ainsworth said:

“AI will help drive down costs and make investing more accessible. The key will be to make sure people are educated and have guardrails to support their investment decisions.”

While recent developments in the world of AI show just how fast the technology is growing, a human touch is still missing in AI interactions. Despite the advances, AI systems are unable to comprehend an individual’s unique circumstances through a simple chat interface or provide emotional support when red candles take over.

Human advisers, on the other hand, are able to provide this type of support and don’t raise privacy concerns the way AI systems do.

Nevertheless, AI is here to stay, and the market will likely determine whether financial tools using the technology are retail-ready.

First of many? How Italy’s ChatGPT ban could trigger a wave of AI regulation

Italy has recently made headlines by becoming the first Western country to ban the popular artificial intelligence (AI)-powered chatbot ChatGPT.

The Italian Data Protection Authority (IDPA) ordered OpenAI, the United States-based company behind ChatGPT, to stop processing Italian users’ data until it complies with the General Data Protection Regulation (GDPR), the European Union’s user privacy law.

The IDPA cited concerns about a data breach that exposed user conversations and payment information, the lack of transparency, and the legal basis for collecting and using personal data to train the chatbot.

The decision has sparked a debate about the implications of AI regulation for innovation, privacy and ethics. Italy’s move was widely criticized, with its Deputy Prime Minister Matteo Salvini saying it was “disproportionate” and hypocritical, as dozens of AI-based services like Bing’s chat are still operating in the country.

Salvini said the ban could harm national business and innovation, arguing that every technological revolution brings “great changes, risks and opportunities.”

AI and privacy risks

While Italy’s outright ChatGPT ban was widely criticized on social media channels, some experts argued that the ban might be justified. Speaking to Cointelegraph, Aaron Rafferty, CEO of the decentralized autonomous organization StandardDAO, said the ban “may be justified if it poses unmanageable privacy risks.”

Rafferty added that addressing broader AI privacy challenges, such as data handling and transparency, could “be more effective than focusing on a single AI system.” The move, he argued, puts Italy and its citizens “at a deficit in the AI arms race,” which is something “that the U.S. is currently struggling with as well.”

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Vincent Peters, a Starlink alumnus and founder of nonfungible tokens project Inheritance Art, said that the ban was justified, pointing out that GDPR is a “comprehensive set of regulations in place to help protect consumer data and personally identifiable information.”

Peters, who led Starlink’s GDPR compliance effort as it rolled out across the continent, commented that European countries who adhere to the privacy law take it seriously, meaning that OpenAI must be able to articulate or demonstrate how personal information is and isn’t being used. Nevertheless, he agreed with Salvini, stating:

“Just as ChatGPT should not be singled out, it should also not be excluded from having to address the privacy issues that almost every online service needs to address.”

Nicu Sebe, head of AI at artificial intelligence firm and a machine learning professor at the University of Trento in Italy, told Cointelegraph that there’s always a race between the development of technology and its correlated ethical and privacy aspects.

ChatGPT workflow. Source: OpenAI

Sebe said the race isn’t always synchronized, and in this case, technology is in the lead, although he believes the ethics and privacy aspects will soon catch up. For now, the ban was “understandable” so that “OpenAI can adjust to the local regulations regarding data management and privacy.”

The mismatch isn’t isolated to Italy. Other governments are developing their own rules for AI as the world approaches artificial general intelligence, a term used to describe an AI that can perform any intellectual task. The United Kingdom has announced plans for regulating AI, while the EU is seemingly taking a cautious stance through the Artificial Intelligence Act, which heavily restricts the use of AI in several critical areas like medical devices and autonomous vehicles.

Has a precedent been set?

Italy may not be the last country to ban ChatGPT. The IDPA’s decision to ban ChatGPT could set a precedent for other countries or regions to follow, which could have significant implications for global AI companies. StandardDAO’s Rafferty said:

“Italy’s decision could set a precedent for other countries or regions, but jurisdiction-specific factors will determine how they respond to AI-related privacy concerns. Overall, no country wants to be behind in the development potential of AI.”

Jake Maymar, vice president of innovation at augmented reality and virtual reality software provider The Glimpse Group, said the move will “establish a precedent by drawing attention to the challenges associated with AI and data policies, or the lack thereof.”

To Maymar, public discourse on these issues is a “step in the right direction, as a broader range of perspectives enhances our ability to comprehend the full scope of the impact.” Inheritance Art’s Peters agreed, saying that the move will set a precedent for other countries that fall under the GDPR.

For those who don’t enforce GDPR, it sets a “framework in which these countries should consider how OpenAI is handling and using consumer data.” Trento University’s Sebe believes the ban resulted from a discrepancy between Italian legislation regarding data management and what is “usually being permitted in the United States.”

Balancing innovation and privacy

It seems clear that players in the AI space need to change their approach, at least in the EU, to be able to provide services to users while staying on the regulators’ good side. But how can they balance the need for innovation with privacy and ethics concerns when developing their products?

This is not an easy question to answer, as there could be trade-offs and challenges involved in developing AI products that respect users’ rights.

Joaquin Capozzoli, CEO of Web3 gaming platform Mendax, said that a balance can be achieved by “incorporating robust data protection measures, conducting thorough ethical reviews, and engaging in open dialogue with users and regulators to address concerns proactively.”

StandardDAO’s Rafferty stated that instead of singling out ChatGPT, a comprehensive approach with “consistent standards and regulations for all AI technologies and broader social media technologies” is needed.

Balancing innovation and privacy involves “prioritizing transparency, user control, robust data protection and privacy-by-design principles.” Most companies should be “collaborating in some way with the government or providing open-source frameworks for participation and feedback,” said Rafferty.

Sebe noted the ongoing discussions on whether AI technology is harmful, including a recent open letter calling for a six-month stop in advancing the technology to allow for a deeper introspective analysis of its potential repercussions. The letter garnered over 20,000 signatures, including tech leaders like Tesla CEO Elon Musk, Apple co-founder Steve Wozniak and Ripple co-founder Chris Larsen — among many others.

The letter raises a valid concern to Sebe, but such a six-month stop is “unrealistic.” He added:

“To balance the need for innovation with privacy concerns, AI companies need to adopt more stringent data privacy policies and security measures, ensure transparency in data collection and usage, and obtain user consent for data collection and processing.”

The advancement of artificial intelligence has increased the capacity it has to gather and analyze significant quantities of personal data, he said, prompting concerns about privacy and surveillance. To him, companies have “an obligation to be transparent about their data collection and usage practices and to establish strong security measures to safeguard user data.”

Other ethical concerns to be considered include potential biases, accountability and transparency, Sebe said, as AI systems “have the potential to exacerbate and reinforce pre-existing societal prejudices, resulting in discriminatory treatment of specific groups.”

Mendax’s Capozzoli said the firm believes it’s the “collective responsibility of AI companies, users and regulators to work together to address ethical concerns, and create a framework that encourages innovation while safeguarding individual rights.”

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The Glimpse Group’s Maymar stated that AI systems like ChatGPT have “infinite potential and can be very destructive if misused.” For the firms behind such systems to balance everything out, they must be aware of similar technologies and analyze where they ran into issues and where they succeeded, he added.

Simulations and testing reveal holes in the system, according to Maymar; therefore, AI companies should seemingly strive for innovation, transparency and accountability.

They should proactively identify and address potential risks and impacts of their products on privacy, ethics and society. By doing so, they will likely be able to build trust and confidence among users and regulators, avoiding — and potentially reverting — the fate of ChatGPT in Italy.

Stress test? What Biden’s bank bailout means for stablecoins

The collapse of Silicon Valley Bank (SVB), which suffered a bank run after revealing a hole in its finances over the sale of part of its inflation-hit bond portfolio, led to a depegging event for major stablecoins in the crypto sector, leaving many to wonder whether it was a simple stress test or a sign of weakness in the system.

The second-largest stablecoin by market capitalization, the Centre Consortium’s USD Coin (USDC), saw its value plunge to $0.87 after it was revealed that $3.3 billion of its over $40 billion in reserves was held at SVB and was, as a result, possibly lost. Coinbase seemingly exacerbated the crisis when it, a member of the Consortium, announced it was halting USDC-to-dollar conversions over the weekend.

As USDC lost its peg, so did decentralized stablecoins using it as a reserve asset. The most notable of which is MakerDAO’s Dai (DAI), a cryptocurrency-backed stablecoin that has well over half of its reserves in USDC.

Stablecoins restored their peg after the United States government stepped in and ensured depositors at SVB and Signature Bank would be made whole, in a move meant to stop other entities from suffering irreparable damage. According to United States President Joe Biden, taxpayers did not feel the burn of the bailout, and the traditional finance system was safe after the intervention.

The crisis, however, did not end there. While the U.S. government stepping in helped stablecoins recover their peg, many quickly pointed out that taxpayers would ultimately suffer the depositors’ bailout.

The banking crisis’ effects on digital assets

Financial institutions have since banded together to protect other banks, with investors and depositors raising questions about the stability of a number of other institutions, including Deutsche Bank.

Credit Suisse collapsed after investments in different funds went south and an unsubstantiated rumor on its impending failure saw customers pull out over 110 billion Swiss francs of funds in a quarter from it, while it suffered a loss of over 7 billion CHF.

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The collapse saw the Swiss government broker an “emergency rescue” deal where Credit Suisse was acquired by rival UBS at a steep discount. Speaking to Cointelegraph, Jason Allegrante, chief legal and compliance officer at blockchain infrastructure company Fireblocks, said that the banking crisis was partly caused by rising interest rates exposing banks with large portfolios of low-interest-rate bonds to risk.

Per Allegrante, the role of the liquidity coverage ratio, a regulatory requirement forcing banks to hold a certain amount of “high-quality liquid assets” to prevent these liquidity crunches, is not being openly discussed.

He said it’s “entirely possible we are in the early stages of a nationwide run on regional banks.” If this happens, he said, there will not only be widespread regional bank failure but there will “likely be further consolidation and concentration of deposits in a handful of large, systematically important banks.”

He added that such a crisis would put pressure on regional banks to sell assets to meet liquidity needs and could ultimately lead to more bank failures. Allegrante added that this would have “far-reaching consequences for the digital asset industry in the United States and abroad.”

Becky Sarwate, spokesperson and head of communications at cryptocurrency exchange, told Cointelegraph that the crisis could be a boon for digital assets, saying:

“One thing is clear: Similar to how Bitcoin blossomed from the wreckage of the 2008 financial crisis, the failure of institutions like SVB and Signature Bank is compelling evidence for diversification across multiple investment verticals.”

Sarwate added that when “traditional pathways prove equally volatile from the perspective of a crypto curious participant, it throws the inherent risk of any market participation into relief.” She added that while digital assets lack some of the protections seen in traditional finance, they “offer an alternative set of benefits that, in our current climate, could be appealing to nervous investors.”

Investors holding onto stablecoins and earning yield through them, however, may have believed they were already diversifying and sidestepping the market rout that was occurring. Circle, the issuer of USDC, suggested the depeg event was a “stress test” that the system weathered.

Mitigating risk for stablecoins

If the Federal Deposit and Insurance Corporation (FDIC) were to extend insurance to crypto-related institutions, it could alleviate concerns about the security of digital assets under their custody. That same insurance helped USDC and other stablecoins recover their peg after the collapse of SVB, making a strong case for FDIC insurance to boost crypto adoption.

While that insurance typically only goes up to $250,000, the FDIC opted to make every depositor whole, essentially protecting Circle’s $3.3 billion in reserves held at the bank. Speaking to Cointelegraph, a spokesperson for the stablecoin issuer said that the events highlighted “how there’s a co-dependency — not a conflict — in banking and digital finance.”

The spokesperson added that just as the 2008 global financial crisis led to comprehensive banking reforms, it may be “well past time that the U.S. acts on federal payment stablecoin legislation and federal oversight of these innovations.” The spokesperson added:

“The emphasis here is the importance of shoring up markets and confidence, protecting consumers and ensuring that outcomes, in the long run, prove that the stress test could have been weathered by traditional financial firms and Circle.”

To Circle, a stable U.S. banking system that ensures deposits are safe and accessible is essential to the financial system, and the U.S. government’s actions to make depositors whole demonstrated their “recognition of this fact.” The safety and soundness of the banking system are critical to dollar-backed stablecoins, the firm added.

Circle has revealed that it has since moved the cash portion of USDC’s reserve to Bank of New York Mellon, the world’s largest custodian bank with over $44 trillion in assets under custody, with the exception of “limited funds held at transaction banking partners in support of USDC minting and redemption.”

The firm added it has “long advocated for regulation such that we can become a full reserve, federally supervised institution.” Such a move would insulate its “base layer of internet money and payment systems from fractional reserve banking risk,” the spokesperson said, adding:

“A federal pathway for legislation and regulatory oversight allows for the U.S. to be represented and have a seat at the table as the future of money is being discussed around the world. The time to act is now.”

Commenting on the depeg, Lucas Kiely, chief investment officer of Yield App, noted that what happened can be “largely attributed to fears around liquidity,” as most stablecoins are “essentially an IOU note backed by securities that holders don’t have a lien on.”

Per Kiely, stablecoins have “been sold as asset-backed instruments, which like any other asset carry investment risk.” Danny Talwar, head of tax at crypto tax calculator Koinly, said that USDC and Dai may “temporarily suffer from a lack of confidence over the short to medium term following the mini-bank run.”’s Sarwate, however, said the confidence in these stablecoins “has gone unchanged,” as both Dai and USDC “retreated back to their reflections of the U.S. dollar and resumed all prior uses they enjoyed before the depegging event.”

To members of the decentralized autonomous organization (DAO) that governs Dai, MakerDAO, confidence was seemingly unaffected. A recent vote has seen members of the DAO opt to keep USDC as the primary collateral for the stablecoin over diversifying with Gemini Dollar (GUSD) and Paxos Dollar (USDP) exposure.

Given USDC’s move of the cash portion of its reserves to a stronger custodian, the depegging event may have simply strengthened both stablecoins after a short period of panic.

Leveling the playing field

That strengthened position, according to Koinly’s Talwar, could also come as cryptocurrency startups and exchanges search for alternative banking providers, although the “de-banking of crypto businesses could seriously harm the sector and innovation in blockchain-based technologies” if they fail to find alternatives.

In the medium term, Talwar said, the collapse of cryptocurrency-friendly banks “will compound with the more crypto-native collapses from the past year, resulting in a challenging environment for blockchain innovation to thrive within the United States.”

Yield app’s Kiely said that the U.S. government’s recent bailout was different from the one seen in the global financial crisis, although it raises “questions over whether there needs to be an adjustment in the supervisory guidelines to address interest rate risk.”

The Fed’s bailout, he said, could be removing incentives for banks to manage business risks and send a message they can “lean on the government’s support if customer funds are mismanaged, all with no alleged cost to the taxpayer.”

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As for stablecoins, Talwar said he sees a need for more stablecoin options, even though the launch of euro-backed stablecoins helped in this regard.’s Sarwate noted that the U.S. banking and stablecoin crisis helped “level the playing field between traditional finance and crypto.”

While crypto is still a nascent industry, she said, there’s “potential within the space for visionaries to lead by example and carve out an alternative to speculative investing. In the long term, this could help yield a more balanced system.”

In the typical crypto ethos, players in the space are already finding ways to mitigate risks associated with the traditional financial system. While U.S. regulators warn against crypto, the sector moves to strengthen its position in the financial world.

Regulation and risk: Factors driving demand for a euro-backed stablecoin

Stablecoins are a type of cryptocurrency offering investors price stability. The most popular stablecoins are those backed by the United States dollar — the world’s leading reserve currency. Others are less popular and not widely used, so many may not have heard of alternatives if they haven’t searched for them.

According to data from the International Monetary Fund, the euro is the world’s second most widely held reserve currency, behind the U.S. dollar and ahead of the Chinese yuan. The euro is the official currency of the eurozone, comprising 20 of 27 member states of the European Union (EU), with over 300 million people using it as their base currency.

In the cryptocurrency space, the euro is widely adopted by cryptocurrency trading platforms serving users in EU countries. Yet when it comes to stablecoins, euro-backed options are not as popular, with the most prominent ones offered by leading stablecoin providers.

Leading euro-backed stablecoins fall behind

The world’s largest stablecoin issuers, Tether and Circle, have euro-backed stablecoins in circulation. Euro Tether (EURT) has over 200 million tokens in circulation but is dwarfed by the U.S. dollar-backed Tether (USDT), with 70.9 billion circulating tokens.

Similarly, Circle’s Euro Coin (EUROC) has nearly 32 million circulating tokens, while its U.S. dollar-backed stablecoin USD Coin (USDC) has a circulating supply of over 42 billion. Cointelegraph reached out to Circle for comment on these figures. The company highlighted EUROC’s growing adoption, with the Nasdaq-listed cryptocurrency exchange Coinbase recently announcing its listing.

EUROC is less than one year old, launching in June 2022. USDC, on the other hand, was launched in 2018 by the Centre Consortium, of which both Circle and Coinbase are founding members.

Speaking to Cointelegraph, Danny Talwar, head of tax at crypto tax calculator Koinly, said that a widely adopted euro stablecoin would be “absolutely” beneficial for cryptocurrency markets, as it could “allow for faster on-ramps and off-ramps to and from exchanges and DeFi protocols.”

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Nevertheless, when looking at the circulating supply of U.S. dollar and euro-backed stablecoins, Talwar said that “demand globally remains for U.S.-dollar-denominated stablecoins, with the euro experiencing heightened volatility over the past 12 months.”

The recent rise in interest rates has sparked concerns over the ability of some eurozone economies to withstand their impact. The European Central Bank has already raised its rate to 2.5%, which remains significantly lower than the current federal funds rate of 4.50% to 4.75% in the United States.

Would a popular euro stablecoin be positive for crypto?

While rising interest rates pose significant risks, they also bring in new opportunities, especially for those with cash lying around. Stablecoin issuers like Tether and Circle back circulating tokens with equivalent reserves, allowing them to benefit from higher rates. While the interest is there, stablecoins only grow if user demand exists.

Speaking to Cointelegraph, a Tether spokesperson noted that a widely adopted euro stablecoin could be positive for the cryptocurrency space, as it “provides a faster, less costly option for asset transfer to anyone with a cryptocurrency wallet.” For Tether, it could “represent another step forward n the journey toward increased financial access.” The spokesperson added:

“Stablecoins demonstrate more and more their usefulness as a store of value, as they provide more stability, a form of remittance, a hedge against central bank policymakers who seek to influence their domestic currencies, and a much cheaper form of accessing financial services.”

Such a stablecoin, the spokesperson said, would reinforce the euro, the same way USDT reinforces the U.S. dollar as one of the most “dominant currencies across the globe.” While introducing an “opportunity for many markets, as it also acts as an on-ramp to the decentralized finance ecosystem.”

They said Tether is more interested in introducing a stablecoin backed by the euro to emerging markets instead of European markets. This is because the firm believes people in emerging markets have a greater demand for stablecoins backed by stable fiat currencies. These stablecoins can help people “protect themselves from high devaluation of their national currency.”

A stablecoin’s usefulness as a store of value, for remittances, and as a hedge against currency devaluation could help it increase financial access for people worldwide and boost demand for it.

Demand for a euro stablecoin

As users buy more of a stablecoin, its reserves swell, and the company managing it can bring in more cash through treasuries and other cash equivalents.

Demand for a stablecoin backed by the euro and representing a blockchain-based version of the eurozone currency makes sense. Speaking to Cointelegraph, Lucas Kiely, chief information officer of Yield App, said that most stablecoins are currently denominated in dollars. However, “for those who want to hold their euros on-chain without taking on the EUR/USD currency risk, a euro stablecoin provides that capability.”

According to Kiely, there’s no reason a euro-denominated stablecoin shouldn’t compete with U.S. dollar-denominated stablecoins, given the euro’s status as a global reserve currency. He said that euro-backed stablecoins “need to have greater adoption before they become more prevalent,” adding:

”Ultimately, it boils down to whether people want to hold the euro natively or speculate on EUR/USD prices, and whether regulators are willing to accept third-party euro coin issuance.”

He added that the Markets in Crypto-Assets (MiCA) regulation, set to be voted on by the European Parliament in April, will significantly impact the future of stablecoin development.

Regulations matter

The outcome of the vote on MiCA will determine the regulatory requirements and framework for stablecoin issuers operating in the European Union, with potentially far-reaching implications in the broader cryptocurrency market.

Kiely said that regulators have adopted a “light touch to crypto regulation,” allowing innovation to thrive, but increased regulation “doesn’t need to spell doom and gloom.”

Tether’s spokesperson told Cointelegraph that MiCA will bring “heavy circulation restrictions on non-euro denominated stablecoins in Europe used as a means of exchange in this way,” adding that the stablecoin issuer is looking forward “to continuing to work with regulators to cement the existence of digital currencies and stablecoin as a staple of economic freedom and innovation.”

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Tether further expressed hope for greater regulation of the stablecoin industry, emphasizing the need for regulatory clarity in the crypto market, especially for larger corporations, institutions and fintech companies looking to enter the space.

They said that regulatory clarity would benefit stablecoin issuers and help modernize the payments system and increase access to the financial system.

Blockchain-based versions of fiat currencies have several advantages over fiat currencies, thanks to their use of distributed ledger technology. As financial regulators address the risks associated with stablecoins, they should articulate the larger goal of advancing financial innovation and promoting greater financial inclusion.