Cryptocurrencies seems all the craze these days. Stablecoins are types of cryptocurrencies that are aimed at maintaining a stable market value by specifically setting their worth to an external reference. This can be anything such as commodity or a flat currency. They are more stable than other, more volatile cryptocurrencies. They are ideal for transactions and as a store of value. In the general sense of the word, these are typically based by reserves.
The future vision for the crypto industry
The crypto industry could move closer to the financial mainstream this week as several bills are set to make headway in the U.S. Congress, potentially spurring many companies to issue their own stablecoins. The House of Representatives is expected to debate a slate of crypto-related legislation during what the Republican majority has labeled “crypto week.” The most prominent is a bill that would create a regulatory framework for stablecoins and is likely to advance to President Donald Trump’s desk.
Crypto week is that crucial time during mid-July when the House of Representatives have been scheduled to debate as well as vote on three major pieces of the crypto-friendly legislation. If signed into law, stablecoins would be required to be backed by liquid assets — such as U.S. dollars and short-term Treasury bills — and issuers would have to publicly disclose the composition of their reserves on a monthly basis. T-Bills or Short-term Treasury bills are debt instruments that have been issued by the US government.
A worldwide approach to these matters
Maturity ranges for these Treasury bills are between four weeks to one year. They are considered as a safe means of investment. Here is an overview of major companies globally that have launched, or are considering launching, their own stablecoins:
- FISERV FI.N – In June, the financial technology firm unveiled plans to launch a stablecoin. The company said its stablecoin, FIUSD, will be integrated into its existing banking and payments infrastructure by year-end. It added that FIUSD will rely on stablecoin infrastructure provided by Paxos and Circle.
- MAJOR U.S. BANKS – Big U.S. banks are holding internal discussions about expanding into cryptocurrencies as they get stronger endorsements from regulators, but initial steps will be tentative, centering on pilot programs, partnerships or limited crypto trading, Reuters reported in May.
- Bank of America BAC.N could launch stablecoins, its CEO Brian Moynihan said earlier this year, while Morgan Stanley MS. N wants to work with regulators to see how it can be a middleman for crypto-related transactions, CEO Ted Pick said earlier this year.
- WALMART WMT.N AND AMAZON AMZN.O – The U.S. retail giants have recently explored issuing their own stablecoins, the Wall Street Journal reported in June, citing people familiar with the matter.
Stablecoins keep rolling through the world
A further overview on the world of stablecoins:
- BANCO SANTANDER SA SAN.MC – The Spanish bank is mulling an expansion in digital assets, including early-stage plans to offer a stablecoin, Bloomberg News reported in May, citing people with knowledge of the matter.
- WORLD LIBERTY FINANCIAL – U.S. President Donald Trump’s World Liberty Financial crypto venture launched a dollar-pegged stablecoin this year, called USD1. The token has a market value of roughly $2.2 billion, according to CoinGecko.
- PAYPAL PYPL.O: The payments giant launched a U.S. dollar stablecoin in August 2023, becoming the first major financial technology firm at the time to embrace digital currencies for payments and transfers.
- PAXOS – The crypto-native company issues the Global Dollar stablecoin (USDG) and the Pax Dollar (USDP), both pegged 1:1 to the U.S. dollar.
- TETHER – The crypto company issues an eponymous stablecoin, which is the world’s largest by market value, according to CoinMarketCap. The USDT token, with a market cap of over $159.5 billion, is pegged to the U.S. dollar.
There is a fair number of benefits involved with stable coins. One of these include a low volatility risk. This in essence means that investors and traders are able to make informed decisions without any concern about sudden drops or spikes in value. Another important factor is price stability. These coins maintain a stable value, which is often pegged to some flat currencies such as the U.S. dollar. T
GCN.com/REUTERS.
