‘Dark stablecoins’ could emerge as regulations tighten
Demand for censorship-resistant "dark stablecoins" is expected to rise as governments increase oversight of the cryptocurrency industry. Stablecoins have been favored for asset storage due to minimal government interference, but upcoming regulations may change this dynamic. Proposed legislation in the U.S. aims to regulate stablecoins similarly to traditional banks, potentially enabling automatic tax collection and wallet freezes. The EU's Markets in Crypto-Assets (MiCA) regulation mandates transparency and regulation for stablecoins. A dark stablecoin could be algorithmically maintained, avoiding external asset pegs to reduce regulatory susceptibility. Privacy technologies like Zcash and Monero are already shielding transactions, with projects like Zephyr Protocol and PARScoin working on similar solutions for stablecoins. The market cap of U.S. dollar-denominated stablecoins surpassed $230 billion in April, a 54% increase from the previous year, with Tether and USDC controlling 90% of the market. Total stablecoin volumes reached $27.6 trillion in 2024, exceeding Visa and Mastercard combined.
