The sharp increase in stableecoin use could drain as much as $ 1 trillion from new market banks over the next three years as savors are seeking the security and liquidity of Dollar-Pegged Digital Assets, Standard Chartered said in a Monday report.
Stableecoins provide households and businesses in the development of economies an alternative to local banks that accelerate a post-financial crisis change of core banking functions to the non-banking sector, analysts Geoff Kendrick and Madhur Jha wrote.
Stableecoins are cryptocurrencies whose value is bound to another asset, such as the US dollar or gold. They play an important role in cryptocurrency markets that provide a payment infrastructure and are also used to transfer money internationally.
The adoption of these cryptocurrencies has been strongest in countries with weak currencies and high inflation, including Egypt, Pakistan, Bangladesh and Sri Lanka, where the depositing flight is acute, the analysts wrote.
Even without offering dividends that are now excluded under US Genius Law, StableCeCo’s users are attracting to prioritizing capital preservation, the report says.
Standard chartered forecasts The global stableecoin market hits $ 2 trillion by 2028, with about two-thirds of the demand from new markets.
The bank noted that although stableecoins threaten traditional deposits, they also promise cheaper transfers and faster payments.
Many new market regulators respond with pilots with digital currency and upgraded payment systems. Still, Standard Charter warns that unless local authorities adapt quickly, “stableecoin summer” could be a long winter for banks in new markets.
Read more: StableCOin Market Waves on US Regulation, with Circle’s USDC Winning Ground: JPMorgan
