IMF First Deputy Managing Director Dan Katz said that domestic stablecoins intended to curb reliance on dollar-backed tokens could paradoxically accelerate their adoption. When local and dollar stablecoins operate on the same blockchain infrastructure, users can convert between them through decentralized exchanges or peer-to-peer swaps. Using South Africa as an example, Katz noted that dollar-backed stablecoins have gained more traction than rand-linked tokens, largely due to superior liquidity and cross-border acceptance. He warned that this shift could move foreign exchange activity away from traditional banks and reduce authorities’ ability to monitor capital flows. Katz urged regulators to bring onramps, offramps and onchain exchange points within regulatory frameworks.
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