ANASHAN

08/30 15:30

Banks Race to Integrate Stablecoins as $68B Hits E

Banks Race to Integrate Stablecoins as $68B Hits Exchanges – But at What Cost?

Stablecoins are quickly becoming a killer use case for crypto, and banks and traditional financial institutions are starting to take notice.

Recent data from CryptoQuant shows the total value of stablecoin holdings on crypto exchanges has reached a new all-time high of $68 billion on August 22 this year. Additional statistics show the global stablecoin market capitalization is valued at over $280 billion.

Are Stablecoins Good for Crypto, but Bad for Banks?

But while the growth of stablecoins is helping the crypto sector mature, banks and traditional financial institutions have begun expressing concerns.

The Financial Times recently reported that banks are pushing to change new U.S. stablecoin rules over the uncertainty of trillions of dollars’ worth of outflows.

Banks have also taken note of the GENIUS Act, which prohibits issuers from paying yield to customers using stablecoins. However, crypto exchanges will continue to indirectly offer interest and rewards to stablecoin holders, creating competition between banks and exchanges that provide access to stablecoins.

Charles Wayn, co-founder of Web3 growth platform Galxe, told Cryptonews that he believes this is a main concern for banks.

“Users deposit their stablecoins onto a crypto exchange and earn a superior yield to what is available on traditional bank accounts. The GENIUS Act further makes this a more compelling offering than it was previously because of the added consumer protections and backing guarantees,” Wayn said.

As a result, many banks are now fearful that an uneven playing field exists between traditional finance and offerings by crypto exchanges.

On the other hand, Wayn pointed out that banks still possess some advantages over crypto exchanges when it comes to stablecoins.

“Crypto exchanges don’t offer the same protection as FDIC insurance, so banks still have an advantage in terms of public perception,” he said.

Adding to this, James Smith, co-founder of digital asset platform Elliptic, told Cryptonews that in jurisdictions like the U.S., regulations are emerging that require stablecoin issuers to hold reserves with federally regulated banks.

As such, Smith noted this creates a new client segment for banks. However, this also results in a compliance obligation, since those banks must conduct due diligence on issuers and tokens.

#Post To Earn Bonus#HTX 12th-Anniversary Carnival#HTX community ✖ SUNPUMP Creator Championship#Buy Bitcoin’s dip,’ says Eric Trump#HTX Crypto Gifts Carnival Is Live!

4Share