The Digital Euro Association claims in a new study that by utilizing the potential of stablecoins, Europe could take the lead globally in the development of the Internet of Things (IoT). According to the report, stablecoins in particular have benefits for machine-to-machine (M2M) payment, a market that is poised for development.
M2M micropayments have an increasing number of applications in business and residential settings, including handling fees for shipping containers and other costs associated with a logistics chain, as well as pay-per-use charges for 3D printing, cloud storage, and a variety of other services. Currently, these uses are constrained by their possibly excessive volume and structural flaws, such as the requirement to layer application programming interfaces (APIs).
The study claims that stablecoins could lessen the usability and security issues that APIs present by increasing scalability and lowering or eliminating intermediaries. Additionally, using stablecoins would remove human error.
Because many of the features of stablecoin technology are more applicable elsewhere, M2M payments give Europe an opportunity to benefit from stablecoin technology more broadly:
“Beyond giving admittance to DeFi markets, common stablecoin use cases have focused on working on financial inclusion or diminishing the costs of cross-border remittances, which may not be so convincing in an European context.”
Despite the fact that “leveraging DLT technology in this context is being actively explored,” the European Central Bank has given M2M payments a low priority for a digital euro design.
In light of this, stablecoin incorporation might be important in the future:
“Regulators genuinely must encourage growth in IoT and M2M payments, as it is critical to keeping up with the global competitiveness of the European digital economy.”
The report claims that before stablecoins’ full potential can be realized, regulators must address a machine identity framework, stablecoin interoperability standards, advice for unhosted wallets, and other issues.