Companies are being driven to stablecoins over other cryptocurrencies due to a lack of regulatory clarity, especially in the United States, according to RocketFuel Blockchain Inc (OTCQB:RKFL) CEO Peter Jensen.
RocketFuel, a global payments solutions firm, is calling for greater clarity around cryptocurrency regulations believing this will encourage responsible and confident participation in the cryptocurrency sector.
Jensen told Proactive that this lack of regulatory clarity is prompting companies to turn to stablecoins, cryptocurrencies which are designed to have a relatively stable price. This type of cryptocurrency differs from other coins like Bitcoin or Ethereum, which are used by investors to try to make a profit from the fluctuating price.
Europe and the US in particular are seeing significant traction in the adoption of stablecoins, especially among larger, established companies which carry out cross-border transactions, Jensen said.
“For example, if a company needs to move $1 million to their subsidiary in Germany, they turn to stablecoins because they are not as volatile. Where we most of the traffic is between large established companies with millions or billions in revenue and they’re just looking for the most efficient way to move money from A to B,” he said.
“In a roundabout way, the lack of regulation drives the awareness and adoption of stablecoins, which is what we want to see.”
The adoption of stablecoins is also being driven by PayPal Holdings Inc (NASDAQ:PYPL, ETR:2PP) and other financial firms introducing their own stablecoins. PayPal launched a US-backed stablecoin in August 2023.
“This exposes people to something mysterious to them and they realize it's super easy and much cheaper than the solutions they’ve been using for tens of years,” he said.
Looking ahead, Jensen sees the continued adoption of stablecoins being driven by necessity, as users require their funds to be transferred cheaper and faster via stablecoins than other options. Adoption will grow through “the standard network effect,” he explained.
“A perfect example of a network effect is Facebook. Once they get traction, friends talk and if you want to follow them and see their pictures, you’ve got to get on that platform. The same thing is what’s going on with stablecoins,” Jensen said.