Stablecoins are global payment rails for crypto the way VISA is a global payment rail for fiat money, for example, USDC is regulated, settled instantly and without intermediaries all around the world and that's MUCH more efficient than the current banking system (which is already digitized by the way). If you can't see this I don't know what to tell you.

As far as incentives are concerned the main hurdle I see is that most stablecoins are fully-reserved, which is not capital-efficient. On the other hand, crypto-backed stablecoins are hard to peg and subject to smart contract attacks so much more dangerous for the system.

I agree about the threat of regulations though, in fact there's a push right now to force stablecoin issuers to obtain a banking license in the US, which would be terrible for any start up.

I hope this bill gets rejected.