Stablecoins, tokenized versions of fiat currencies that move on blockchain rails, will eventually force banks and other financial institutions to offer deposit yields to their customers to stay competitive, said Patrick Collison, CEO of payments company Stripe.
The average interest rate on a savings account in the US is 0.40%, and in the EU the average interest rate on a savings account is 0.25%, Collison said in response to VC Nick Carter’s X post outlining the rise of high-yield stablecoins and the future of the sector. Mr Collison added:
“Depositors are looking to earn something close to market returns on their capital, and they should. Some lobbying groups are now calling for Post-GENIUS to further limit any type of compensation associated with stablecoin deposits.”
The business imperative here is clear. Cheap deposits are great, but to be so hostile to consumers feels like a disadvantage to me. ” he continued.
sauce: Patrick Collison
Stablecoins have seen a steady increase in market capitalization and user adoption since 2023, with the increase following the passage of the GENIUS stablecoin bill in the United States. The GENIUS bill paved the way for a regulated stablecoin industry, but also prohibited yield sharing.
Related: Stablecoin market boom to $300 billion provides ‘rocket fuel’ for crypto rally
Banking industry struggles to limit stablecoin revenue opportunities
According to a report from American Banker, banking lobbies were opposed to interest-bearing stablecoins while US lawmakers were deliberating what provisions to include in the final draft of the GENIUS stablecoin regulations.
Banks and their allies in Congress argued that stablecoins, which offer customers the opportunity to earn interest, weaken the banking system and erode market share.
“Do you want stablecoin issuers to be able to issue interest? Probably not, because if you’re issuing interest, there’s no reason to put your money in your local bank,” New York State Sen. Kirsten Gillibrand said at the DC Blockchain Summit in March.
However, crypto industry executives see the rise of stablecoins as the next logical progression and predict that stablecoins will consume traditional fiat payments.
“All currencies will become stablecoins. So even fiat currencies will become stablecoins. They will just be called dollars, euros, yen,” Reeve Collins, co-founder of stablecoin issuer Tether, told Cointelegraph at Token 2049.
magazine: Cryptocurrencies wanted to topple banks, now they are becoming banks in the fight against stablecoins
