Using stablecoins for machine-to-machine (M2M) payments will allow the European Union to lead the development of the Internet of Things (IoT) once crypto legislation is passed.
A new report from the Digital Euro Association outlines options for using stablecoins as an alternative to the digital euro (CBDC). Analysts consider the most promising sphere of application of stablecoins as automated M2M micropayments. In their opinion, the development of this area will give EU countries an opportunity to maintain their digital competitiveness after the adoption of new cryptocurrency legislation.
The M2M payments sphere is ready for growth, and stablecoins have several advantages that could contribute to its development. In particular, stablecoins can:
- increase the scalability of the technology;
- eliminate intermediaries and the human factor;
- improve usability and reduce risks associated with APIs.
The need to use APIs is currently one of the main barriers to the development of machine-to-machine payments and the IoT sphere. At the same time, there’s already an obvious demand for such technologies in industry, office settings, and household activities.
Analysts note that to realize the potential of stablecoins, European regulators must first implement standards for machine identification, stablecoin interoperability, regulation of non-custodial wallets, and a number of other issues.
The European Central Bank (ECB) gave M2M payments low priority for a digital euro design, noting only the active study of DLT options in this context. Recall that the participants in the digital euro pilot project are currently focusing on the political impacts of the CBDC issue, prioritizing compliance with regulatory requirements in its design.
