Global efforts to set uniform rules for stablecoins have slowed, raising alarm among central bankers who warn that fragmented oversight could fragment markets and amplify risk. Bank of England Governor Andrew Bailey — who chairs the Financial Stability Board — told Reuters last week that progress on international stablecoin rules has stalled. That concern was echoed by Bank for International Settlements General Manager Pablo Hernández de Cos, who warned in Japan that weaker coordination risks a patchwork of national regimes that firms could exploit through regulatory arbitrage. The warning comes as major economies press ahead with their own frameworks on varying timelines and with differing approaches. Without international alignment, companies could shift operations to jurisdictions with lighter oversight, undercutting policy goals and increasing systemic vulnerability. Stablecoins have grown rapidly and now total about $320 billion, according to DeFiLlama, with Tether’s USDT and Circle Internet’s USDC accounting for most of that supply. Regulators say the tokens’ mechanics can sometimes look more like securities than cash: redemption frictions can push prices away from their $1 peg, and sudden large-scale withdrawals could reverberate across broader markets. Policymakers and regulators are discussing measures to reduce those risks. Ideas on the table include limiting interest payments on stablecoins and giving issuers access to central bank lending facilities or some form of deposit-insurance–style protections. Supporters argue such steps could make the sector safer while preserving stablecoins’ utility for digital payments. In the U.S., lawmakers are working to put federal rules in place. The Digital Asset Market Clarity Act — which would establish a federal framework for digital asset markets — passed the House last year and is now before the Senate. Senators Tim Scott (Banking Committee) and John Boozman (Agriculture Committee) are leading the effort there, while Thom Tillis and Angela Alsobrooks have negotiated a compromise on stablecoin yields that could pave the way for a markup. Senator Cynthia Lummis, who chairs the Banking Committee’s digital assets subcommittee, has indicated a hearing could come in the second half of April. But a final U.S. deal is still uncertain. Several open issues remain, including how to regulate decentralized finance (DeFi) and certain ethics provisions, meaning congressional action — and global coordination — could still be some way off. With market concentration high and cross-border activity growing, regulators say the stakes are clear: without coordinated international standards, stablecoins risk becoming a source of fragmentation and instability rather than the smooth rails for digital payments they aim to be. Read more AI-generated news on: undefined/news