What is the endgame for stablecoins?
The passage of the GENIUS Act in the United States has kickstarted the run to the level that many believe will reach trillions. We are closing in on $300 billion stablecoins (depending upon how they are tallied). This is a number that could 10x over the next few years.
It is likely that most major US banks bring out their own stablecoins. Numerous reports surfaced mentioning the plans that banks have. The bottom line is all are taking a look. Those with the size are going to enter as the allure is too great.
Of course, one of the risks is commoditization. For the moment, stablecoins can be a branding asset. USDC is known to be Circle while USDT is associated with Tether. JPUSD might JPMorgan whereas BACUSD is Bank of America.
Eventually, all of this will get confusing. Hence, could we see a shift in the future?
Stablecoins Simply Become USD
Stablecoins are going to take over payments. The benefits to both users and back end providers is simply too great to ignore. This is 21st century technology as compared to the archaic rails the present financial system operates upon.
When it comes to price tickers, we commonly associate these with stocks. There is AAPL, HD, BAC, and META. We do not see it, however, with currency unless were are discussing the FOREX market where the US dollar is differentiated from the Australian dollar.
Most currencies are USD, AUD, EUR, or JPY. But again, unless one is into trading these assets, it is not even part of the equation.
Since their introduction, stablecoins have used tickers. This is in alignment with crypto, such as BTC and ETH. Naturally, there has to be some way to distinguish. Or does there?
When it comes to crypto coins, especially those tied to networks, we naturally need to differentiate. One cannot pay gas on Ethereum with BTC or LTC. This has to be clear.
That said, when dealing with a stablecoin, USD denominated, is there a difference? For example does anyone really care about USDT versus USDC especially if they are available on the same network?
The answer is most likely no.
So what does this mean for the future?
All Stablecoins The Same
Ultimately, we might see a shift to where stablecoins simply become USD. It will matter none whether it is USDC, USDT, or some bank coin. Whatever is in the wallet can be used for payment.
The merchant will have a preference. This will be resolved by simply swapping on the back end. If the user pays in USDT yet the business is set up for USDC, the system makes the conversion.
Thus, we could see the move where US dollar denominated stablecoins are simply shown as USD. This will increase the interoperability as infrastructure handles this expansion.
While we can expect hundreds (if not thousands) of stablecoins to emerge, the reality is that only a handful will be used to any great degree. The market will be dominated by 5 or 7. This means that 90% of all transaction will come from just a few stablecoins.
One result is simplified infrastructure. Not every USD stablecoin will be accepted. Some might still operate under their ticker, when specified by the receiver (merchant). Perhaps this is established based upon the platform and what network it is tied to. Some networks have their own base layer stablecoin, making it inherent for anyone operating.
As for the rest, the apps will simply show USD and the back end will convert to whatever the desired stablecoin is.