Banks must abandon the stallion plans and focus on blockchain rails

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Since last year, banks have been Fall on themselves To get involved in the gold rush of the stable. Chartered Standard has already made its First foray in FebruaryWhile the CEO of Bank of America, Brian Moynihan, said that the bank was looking forward to emitting a stablecoin As soon as it is “legal”. When STABLE And GENIUS Invoices at the shirt Going to the United States, we will probably see a huge wave of competing stables launched by some of the largest banks.

It will be a huge mistake.

It is understandable that financial institutions want a piece of stable pie – it is a lucrative company. TETHER – The transmitter of the largest stablecoin in the world by market capitalization, USDT – reported $ 13 billion in profits in 2024, tied with the Goldman Sachs gains. With confidence in the blockchain -based payments that continue to increase and the stalls acting as de facto currency of the increasing cryptography ecosystem, last year, stablecoins saw transaction volumes exceeding those of visa and mastercard combined at 27.6 billions of dollars.

However, the efforts of banks to compete operators operators In this space, are at best wrong and, at worst, a monumental waste of time because these plans are doomed to failure. For several years, the space of Stablecoin has been dominated by two main players: Tether and Rival Circle, the parent company of the USDC Stablecoin. With 144 billion dollars and $ 60 billion in market capitalization, respectively, these two stablescoins constitute the share of the lion of total market capitalization of stablecoin of About 234 billion dollars. And so far, any attempt to dethrone these two leaders has been spectacularly unsuccessful.

Look at Paypal’s company in the stablescoins with its Pyusd token. Launched in August 2023 as a fully regulated rival and in accordance with existing offers, Pyusd’s market capitalization has just reached $ 1 billion a year after the launch, and has since refused to $ 781 million – Even if the USDC and the USDT saw their own stock capitals develop exponentially at that time. Pyusd simply had a hard time gaining ground and rivaling significantly against his greatest rivals. And the stablecoins emitted by the banks will undergo the same fate unless they can offer something that no other stablecoin has previously proposed.

Apart from strong competition, retail investors who would most likely experiment with Stablecoins have not really truly trusted banks since the global financial crisis. It is even worse when this stablecoin is published by an entity belonging to a politician, such as the USD1 part launched by World Liberty Financial – it arouses concerns concerning censorship and surveillance in the same way as the idea of ​​a central digital currency made – and a stablecoin emitted by the bank looks extremely like a CBDC.

The idea of ​​launching stablecoins in separate silos also cancels the advantages of these assets: a simple, interoperable and profitable means of transforming in the digital world. Instead, these products would probably only be available for banking customers, as “A monetary market fund with access to the check or a bank account”, “ According to the CEO of Bofa.

A look at the Stablecoin experience of JP Morgan provides clues to how other banks can approach this. Its JPM part, launched in 2020, was designed specifically as a private tool authorized for its institutional customers. And while JP Morgan says he was a huge successI do not see that it is integrated into payment solutions such as revolut or widely used by the public – and that is exactly what will happen if other banks try to compete in the StableCoin market. If Fintech Paypal could not break it, a traditional bank should not even try.

What banks should be concentrated in place are blockchain rails to facilitate and cheaper for cryptocurrency users to integrate their money into and out of the digital asset ecosystem. If you speak to someone involved in the crypto, they will tell you that and out of exit In traditional bank accounts is the largest point of pain. It is expensive, unreliable and often heavy and slow. It is not integrated into the decentralized financial ecosystem, so users must follow an convoluted trip to the ramp out of ramp through centralized exchanges. And, if you are a small crypto business? Prepare to jump through hoops to get a traditional bank account.

If the banks really want to integrate into the blockchain ecosystem and move into the future, they should abandon their plans to issue new stablecoins that no one wants or needs. Instead, they should adopt their role as a bridge between DEFI and traditional finance by facilitating the easier, faster and cheaper transaction between digital and traditional financial ecosystems in a transparent manner.

This means upgrading their infrastructure so that users can directly crypto on and off-brertel, without using intermediaries like Moonpay, which would make things much cheaper for all those involved. The construction of integration based on APIs for cryptographic wallets like Metamask would enormously ration the process. In addition to this, banks must understand how to comply with renowned renowned regulations and anti-money money laundering while granting users the confidentiality of DEFI. Offering Crypto and other tools for small businesses would also help the entire ecosystem to flourish.

The reality is that crypto needs banks. It is extremely difficult to operate entirely outside the established financial ecosystem. But, also, banks must fully kiss digital assets if they do not want to be left behind as the world is advancing. And the way of doing so is not by trying to compete with the pillars of the digital asset ecosystem which have already experienced more than a decade in advance, but rather by offering additional services to support its growth and development. This is what a win-win situation looks like.