Nikolai Storonsky, CEO of Revolut Ltd., speaks in an interview with Bloomberg TV…(+) on Thursday, August 1, 2019 in London, UK. Revolut has also expanded into stock trading, allowing customers to buy and sell stocks. Sell US stocks. Photographer: Luke McGregor/Bloomberg
© 2019 Bloomberg Finance LP
Stablecoins are already big business. Over $150 billion worth of Tether (USDT), Circle (USDC USDC ), and other fiat-backed tokens (at least in theory) are held by people around the world, and the amount is growing. I am. Now, Revolut plans to join companies like PayPal with its own stablecoin.
Who distributes stablecoins?
According to an analysis by the Center for Economics and Business Research (CEBR) and BVNK, businesses and consumers in 17 countries surveyed are paying a premium to access stablecoins. On average, it’s nearly 5% higher than the standard USD price, rising to $30. % in countries like Argentina. In 2024, these countries are estimated to pay a premium of nearly $5 billion to access stablecoins, rising to an astonishing $25 billion by 2027. The demand is clear.
(But that doesn’t always mean it’s for the better. Chainalysis was responsible for nearly three-quarters of all cryptocurrency fraud transactions last year, and more than four-fifths of payments to sanctioned individuals and companies.) We determined that table coins were used).
Why is there such a demand? A recent YouGov survey (commissioned by Visa and others) of 500 crypto users in each of five emerging markets found that stablecoins (almost all pegged to the US dollar) are core applications in the crypto world. It turns out that it is increasingly being seen as such. 47% of respondents have access to dollars, 43% of respondents have better currency exchange rates (probably to USD), and 32% of respondents have access to cross-border payments (probably to USD) I’m taking advantage of what I can.
Money is now transferred around the world through banking networks. These work reliably, but they come at a cost. Messages about money (think SWIFT) are separate from the actual movement of money (think Fedwire), so adjustments need to be made, etc. So the idea of sending money directly over the Internet is attractive to Wall Street not because of any ideological position, but because it’s a way to cut costs. This is why JPMorgan Chase, for example, developed its own blockchain and launched a programmable dollar on top of it. In financial services, this is a good strategy because regulation gives incumbents an opportunity to use distribution (and lobbying) to launch a counterattack while slowing change.
But bank coins (think Regulatory Responsibility Network, RLN, for example) and stablecoins are different categories, more like apples and airplanes than apples and oranges. As analyst Noel Acheson says, tokenized bank deposits and stablecoins may sound like the same thing, given that they are both types of fiat currency on a shared ledger. , are actually completely different concepts, and the difference is important in usage. Incidents, regulations, and wider awareness of blockchain’s potential.
A global solution.
© Helen Holmes (2024)
Therefore, there are many different options for providing stablecoins to meet global demand. But the question is, who will satisfy it? In my book “The Currency Cold War” (LPP:2020), I am quite bullish about the prospects for stablecoins and argue that there is a market logic to trading asset-backed currencies in the form of tokens and that an explosion will occur. He said he was deaf. different types of tokens. Also, given that one important category of assets is central bank money, the main competitive areas to consider are private asset-based stablecoins and public fiat-backed stablecoins (i.e. , central bank digital currency).
Private stablecoins are starting to take off. News comes that fintech giant Revolut is well on its way to launching its own stablecoin, joining the likes of PayPal, which released the dollar-pegged PYUSD PayPal USD stablecoin a year ago. (currently the 4th largest stablecoin with over $730 million in market capitalization), we could be looking at a $1 trillion market within a reasonable strategic perspective. It’s no exaggeration to say that.
real competition
I believe stablecoins are extremely important for the next generation of financial services. Because stablecoins bring real competition to today’s payment systems. That’s even in the United States, whose innovative financial system lags behind much of the world. While Americans’ payment cards and banking apps work well and provide customers with secure and reliable service, the system is slow and expensive, and its costs are borne by less wealthy people (who spend their meager money). (paying a lot of money for them) is distributed quite unevenly. More competition is good for everyone.
But it doesn’t just mean inclusivity and equity. Cryptocurrency commentators often warn that digital currencies have the potential to destabilize the U.S. dollar, but as Federal Reserve Governor Christopher Waller argued some time ago, stablecoins ‘s dependence on the US dollar could actually strengthen the US dollar as in the ‘Web 3’ world. As mentioned earlier, the demand for a digital dollar is widespread and unmet, and technology provides an opportunity to maintain the dollar as the world’s dominant currency. The market is now clearly signaling that private solutions are gaining traction, especially in the ‘Global South’.
(Companies like Airtm are already creating simple wallets and enterprise payout solutions that combine local services with services like Wise.) How such services will be transformed by a global digital dollar )
There is no doubt about the strategy required. America should encourage an energetic but responsible dollar-denominated stablecoin ecosystem, as the companies that dominate the stablecoin market will wield significant influence over the future of money.
