According to Patrick Collison, CEO of payments company Stripe, stablecoins—digital representations of fiat currencies operating on blockchains—will eventually compel banks and financial institutions to provide yields on deposits to stay competitive.
The average interest rate for savings accounts in the US is 0.40%, while in the EU it stands at 0.25%. Collison remarked in response to VC Nic Carter’s X post discussing the rise of yield-generating stablecoins and the industry’s future. He further commented:
“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 is evident—while inexpensive deposits are advantageous, being overtly consumer-hostile seems like a losing strategy,” he added.
Since 2023, stablecoins have consistently increased in market cap and user adoption, particularly after the introduction of the GENIUS stablecoin bill in the US. This legislation enabled a regulated stablecoin sector but also disallowed 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 lobby opposed interest-generating stablecoins while US lawmakers debated the provisions to include in the final GENIUS stablecoin regulation, according to a report by American Banker.
Banks and their allies in Congress contended that stablecoins offering interest would threaten the banking system and diminish their market share.
“Do you want a stablecoin issuer to be able to issue interest? Probably not, because if they are issuing interest, there is no reason to put your money in a local bank,” remarked New York senator Kirsten Gillibrand at the DC Blockchain Summit in March.
On the other hand, crypto executives view the emergence of stablecoins as a natural evolution, predicting that they will ultimately replace traditional fiat payments.
“All currency will be a stablecoin. So even fiat currency will be a stablecoin. It’ll just be called dollars, euros, or yen,” stated Reeve Collins, co-founder of stablecoin issuer Tether, during Token2049, as told to Cointelegraph.
Magazine: Crypto wanted to overthrow banks, now it’s becoming them in stablecoin fight
