Stablecoins, which are digital representations of fiat currencies utilizing blockchain technology, are expected to compel banks and financial institutions to offer competitive yields on deposits, as stated by Patrick Collison, CEO of Stripe.
Currently, the average interest rate for savings accounts in the US stands at 0.40%, while in the EU, the average is 0.25%. Collison remarked in response to VC Nic Carter’s X post addressing the growth of yield-generating stablecoins and the sector’s future. He added:
“Depositors are going to, and should, earn something closer to a market return on their capital. Some lobbies are currently pushing post-GENIUS to further restrict any kinds of rewards associated with stablecoin deposits.
The business imperative here is clear — while cheap deposits are appealing, maintaining a consumer-hostile approach seems like a losing strategy,” he continued.
Since 2023, stablecoins have consistently increased in market cap and user adoption, particularly after the passage of the GENIUS stablecoin bill in the US. This legislation facilitated a regulated stablecoin industry but also banned yield-sharing.
Related: Stablecoin market boom to $300B is ‘rocket fuel’ for crypto rally
Banking Industry fights to restrict yield-bearing opportunities for stablecoins
The banking sector opposed interest-bearing stablecoins during discussions by US lawmakers regarding the final provisions of the GENIUS stablecoin regulation, according to a report from American Banker.
Banks and allied lawmakers contended that allowing stablecoins to offer interest would threaten the banking system and reduce their market share.
“Do you want a stablecoin issuer to be able to issue interest? Probably not, because if they are offering interest, there’s no incentive to deposit money in a local bank,” stated New York senator Kirsten Gillibrand during the DC Blockchain Summit in March.
Nevertheless, crypto industry leaders consider the ascendancy of stablecoins as an inevitable evolution, predicting that stablecoins will eventually dominate traditional fiat payment systems.
“All currency will eventually be a stablecoin. So even fiat currency will be a stablecoin. It’ll simply be referred to as dollars, euros, or yen,” remarked Reeve Collins, co-founder of stablecoin issuer Tether, during an interview with Cointelegraph at Token2049.
Magazine: Crypto aimed to dismantle banks, and now it’s becoming them in the stablecoin debate
