Bernstein: Stablecoin market cap set to soar to $2.8 trillion, concerns arise over lack of regulation

According to a report by CoinDesk, Wall Street investment bank Bernstein stated in a research report on Wednesday that the stablecoin market is expected to grow from the current $125 billion to $2.8 trillion in the next five years. However, the lack of clear legislation in the United States to regulate stablecoins has raised concerns among lawmakers.

PayPal Sparks Growth Cycle, Expands Stablecoin Platform

Bernstein's report indicates that integration with consumer platforms will lead to a growth cycle for stablecoins, enabling issuers to attract users and expand issuance beyond the native crypto platforms.

Analysts led by Gautam Chhugani wrote:

We expect major global financial and consumer platforms to issue co-branded stablecoins to drive value exchange on their platforms.

However, the growth will be led by "regulated domestic stablecoins."

Unclear U.S. Legislation Raises Concerns

House Democratic leader Maxine Waters expressed concerns about PayPal launching its own stablecoin without a federal framework in place to regulate the asset.

According to a press release by Waters, she believes that with 435 million customers globally, PayPal exceeds the total online accounts of all major banks. Given PayPal's scale and influence, federal oversight and enforcement of its stablecoin business are crucial for consumer protection and maintaining financial stability.

Waters sees stablecoins as a new form of currency issuance, making federal guardrails an essential part. She urges Chairman McHenry and Republican members to return to the negotiating table promptly to craft a truly effective bill.

The House Financial Services Committee introduced the "Clarity for Payments Stablecoins Act" at the end of July. Chairman McHenry stated that the bill aims to protect consumers through federal guardrails while fostering innovation in the U.S. However, bipartisan support is needed for the bill to become law.