CoinShares analysts foresee a defining year for Bitcoin in 2024, suggesting the potential emergence of a Bitcoin-based stablecoin that could rival existing stablecoins in speed and cost.
“We anticipate 2024 as a pivotal year for Bitcoin in the stablecoin arena,” explained analysts from CoinShares in their latest outlook report published on Jan. 22.
“Altogether we predict that a Bitcoin project focused on competing in the modern stablecoin sector will be made easily accessible to users this year.”
The prediction about a Bitcoin-based stablecoin was made by Christopher Bendiksen, Coinshares’ head of Bitcoin research and analyst Matthew Kimmel.
Christopher Bendiksen and Matthew Kimmel of CoinShares envision a successful project leveraging Bitcoin’s stability while offering comparable efficiency.
“The Bitcoin blockchain boasts the longest history, greatest stability, least technical debt, and strongest assurances,”
Bendiksen and Kimmel said in making the case for Bitcoin as a platform for stablecoins.
“We suspect that businesses and Bitcoin plugins will then steadily integrate stablecoin spending, paving the way for continued usage growth.”
They acknowledge that existing technical challenges and user preferences for faster networks have influenced the development landscape.
“Not only is Bitcoin architecturally designed without the flexibility to natively support external assets like dollar-pegged tokens, but history has shown that stablecoin adoption tends to flock towards the platform offering the cheapest transaction costs and highest speed.”
While several firms have developed stablecoins on Bitcoin’s codebase, bitSmiley Labs, supported by OKX, is actively developing a Bitcoin-based stablecoin called bitUSD.
As described in its white paper, bitUSD will be fully collateralized and all bitUSD transactions will be publicly viewable on the Bitcoin blockchain.
Crypto regulations
The analysts also actively highlight regulatory developments, including the SEC’s approval of a bitcoin ETF. They actively note the potential approval of a spot ether ETF by the SEC and actively consider the impact of the EU’s MiCA regulation on stablecoins.
The implementation of MiCA, the EU’s regulation for CASPs and stablecoins, will be in the spotlight while the UK’s proposals for regulating digital assets are being developed.
MiCA is expected to come into effect by the end of the year, and some regulators are already working with CASPs to get them ready for day 1. This process is happening alongside the publication of multiple Technical Standards, which will provide details for the MiCA regulation.
MiCA and the associated Technical Standards will be the most comprehensive package of crypto regulations in the world and will likely set the global standard for other countries to follow.
MiCA also sets rules for the issuance of stablecoins, including E-Money Tokens and Asset-Referenced Tokens, that will come into effect on 30 June 2024. These rules will provide standardization for the governance, liquidity, and disclosures of stablecoin issuers within the EU, which is a large consumer market.
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