Who is going to win the stablecoin race?
Right now, Tether (USDT) has a wide lead. This is a global currency that is used by people all over the world.
Will that be the case in the future?
The passage of the GENIUS Act, along with the expected STABLE Act, means the United States will have regulatory clarity. This is something that is presently lacking, keeping major institutions such as banks on the sidelines.
It is about to change.
Over the last few months, we discussed the stablecoin industry a great deal. With it inching closer, we can perhaps start to forecast who will be the big winners.
I am on record as stating the I think the overwhelming majority of stablecions will be USD denominated. While there will be other stablecoins out there, the market will be USD.
For this reason, the focus will reside here.
Amazon and Walmart Will Dominate USD Stablecoin Market
Banks are facing a major disruption.
The issuance of stablecoins causes a shift in deposits. This is something that banks faced with the rise of FinTech. Stablecoins provide another level of monetary supply expansion, something presently controlled by the commercial banks.
We can expect most major banks to offer their own stablecoin. JPMorgan just did a trademark on JPMD. This is going to be their stablecoin used for settlements.
Even though the banks are going to jump in, they are facing some stiff competition. Mark Zuckerberg got a lot of attention on Capitol Hill as he appeared in front of the Senate. They were worried what he is going to do with stablecoins.
However, the big winner might be Amazon and Walmart. These companies are looking at getting into the fray.
Stablecoin Coin Domination By Retailers
When in Rome...
Walmart and Amazon are the two biggest retailers in the West (perhaps the entire world). They have annual sales that in the hundreds of billions of dollars.
When it comes to the digital realm, Amazon is obviously light years ahead of Walmart. That said, the latter has gain some steam in recent years, developing a formidable platform.
Stablecoins, in the minds of most, are for payments. This is how they are being framed by the entire industry. From this perspective, who receives more payments than these two companies, at least from the general public?
For this reason, it makes sense for both companies to bring out their own coins and have everyone tied to the platform operate using them. In the case of Amazon, this means that all payments to vendors would come via this token.
The digital realm is ruled by network effects. Since the overwhelming majority of transactions are digital, currency basically operates in that world. It is why the US dollar is not going to be taken down. The network effects tied to that currency are unrivaled.
On a smaller scale, Amazon and Walmart have the ability to duplicate that. While JPMorgan can bring out its coin, how many transactions on behalf of the general public does it really do? While it might facilitate paying the utility bill, consider how many times some people shop at Amazon. For many, it is a daily occurrence.
People Do Not Like Banks
People simply do not like banks. While some might not have the hatred that many do, it is something that tends not to be popular with people. Basically they are tolerated.
This same is not true for retailers. Some people absolutely love Amazon. As stated, there are individuals who shop daily. The ability to order something and it showing up at the door changed the face of retail.
Walmart is another entity that has its fans. Some communities see the majority of retail sales being done through this company. There is a reason they are the number one store in the US (by revenue).
How will this affect the stablecoin market? It is speculation but my guess is people would rather have a Walmart or Amazon coin as compared to JPMD. At least with the former, they know where to use it.
Ultimately, I think this comes down to the fact that Amazon and Walmart can add financial features much easier than banks can add retail. Like in our discussions about social media, we are seeing a blending of what is offered. Everything is boiling down to the platform. This means getting people onto it and providing as many services as possible.
Banks are still isolated in their focus. With FinTech being populated by not only tech companies but retailers, this means that banks are going to lag.
Just look at the customer/user numbers. They end up dwarfing what the banks have.