Banks and payment companies “will integrate Tether and ‘stablecoins’ when there is regulation”

The increase in adoption and volume of so-called ‘stablecoins’ is an indication of the urgency of regulating these digital tokens, given their potential to quickly become a viable means of payment. “Many institutions are waiting for the rules of the game are established before being exposed to digital assets “, comment from Bank of America, who believe that” a regulatory framework should incentivize payments companies to integrate blockchain technology and stablecoins in their platforms so that purchases and money transfers faster and cheaper, increasing the use of these tokens by retail users. “

The ‘stablecoins’ market, made up of USDT, the Tether unit, USD Coin or Binance USD, among other’ altcoins, has already reached a value of about $ 141 billion, compared to $ 24 billion a year ago and its quarterly transaction volume will exceed $ 1 billion in 2021. They are cryptocurrencies whose price is designed to be linked to another ‘crypto’, to fiat money or to commodities that are traded on an exchange (such as precious or industrial metals).

The most popular is Tether, which is in the top positions by market capitalization, a short distance from ethereum or bitcoin itself. It is linked to the dollar with a one-to-one exchange rate and causes headaches for the US monetary authorities, who fear a bankruptcy of this cryptocurrency that will put the entire financial system in check, since “the growth potential of stablecoins creates a risk systemic “, they affirm from BofA.

Digital assets and traditional financial markets are more connected than many believe. If bitcoin, the largest token by market value, fell to $ 0, it would probably the impact on traditional financial markets would be limited or nil. However, stablecoins are different, due to the reserves that back them in the form of cash and traditional assets, so the implications of an investor flight from these assets would likely extend to traditional financial markets.

The US investment bank also believes that “the support from the official sector would probably be very limited in the case of a flight of investors from ‘stablecoins’, unless there are clear risks of contagion to the banking or financial system. “This limited capacity to support is derived, on the one hand,” from the limited regulation of digital assets and the lack of clarity in the regulatory jurisdiction, “and on the other,” the inability of the Federal Reserve to carry out transactions with digital assets, “they explain.

For this reason, from Bank of America they insist that “its regulation and a complete regulatory framework will be the next catalysts for the massive adoption of digital assets.” In addition, companies like Mastercard, Signature, Visa y Western Union would be some of the main values ​​benefited by this legal framework.

Likewise, they consider that Mastercard and Visa partnerships with digital asset companies “as a catalyst for non-digital asset owners to enter this ecosystem, ultimately driving wide adoption and use of these instruments.” Mastercard recently announced a partnership with Bakkt, a digital asset marketplace and platform, which will allow financial institutions and merchants on the Mastercard network to use credit and debit cards linked to crypto assets, allowing customers to make payments and receive rewards. in bitcoin. Visa partnered with Coinbase, Circle, and BlockFi, focusing on stablecoins like USD coin, enabling a digital asset settlement system for fiat transactions.

On the other hand, “banks have issued and will likely do so to a greater extent in the future their own stablecoins, establishing new sources of income in the process, but they remain for the moment pending a clear and complete regulatory framework to be established, “they conclude.

We want to thank the writer of this article for this awesome content

Banks and payment companies “will integrate Tether and ‘stablecoins’ when there is regulation”

Dispensary Business News