Banks Exploring Stablecoin Amid Fears of Losing Market Share, BitGo Executive Says
Banks Exploring Stablecoin Amid Fears of Losing Market Share, BitGo Executive Says
BitGo’s stablecoin-as-a-service has drawn significant interest from U.S. and international banks, Ben Reynolds said.
- Interest among institutions to issue their own stablecoins is growing—not to innovate, but to avoid being outpaced by crypto-native competitors, BitGo's Ben Reynolds said.
- Yield-bearing stablecoins are emerging as a tool for faster, frictionless collateral movement, especially valuable for DAOs, protocols, and institutional players, BlackRock's crypto product strategist said.
- Regulatory clarity will determine the future of tokenized assets, with key distinctions between stablecoins and tokenized securities shaping their respective markets.
Amid concerns over potential market share loss, a BitGo executive revealed that numerous U.S. and international banks are showing keen interest in the stablecoin-as-a-service offered by BitGo.
The trend of financial institutions considering launching their own stablecoins is escalating not so much for innovation but to prevent falling behind cryptocurrency-native rivals, according to Ben Reynolds from BitGo.
Stablecoins with yields are gaining prominence as a means for swift and seamless collateral transfers, particularly beneficial for Decentralized Autonomous Organizations (DAOs), protocols, and institutional entities, as stated by BlackRock's cryptocurrency product strategist.
The regulatory landscape will play a crucial role in determining the path of tokenized assets, with clear distinctions between stablecoins and tokenized securities influencing their respective markets.
During a panel discussion, Reynolds noted that BitGo's recently introduced stablecoin service has garnered significant attention from both domestic and foreign banks interested in tokenizing deposits or issuing stablecoins.
Reynolds emphasized how many banks are taking a defensive stance due to fears of deposit erosion. Stablecoins are being considered as a strategy to avoid lagging in the industry.
Although yield-bearing stablecoins and tokenized money market funds have experienced rapid growth recently, they represent only a fraction of the $230 billion stablecoin market.
Sam Broner from A16z believes that while yield-bearing stablecoins show promise as a market segment, their primary utility lies in payments and transactions where users prioritize speed over returns. Instant money transfers across different platforms could be an imminent game-changer use case for these assets.
Yield-earning stablecoins might offer attractive prospects for institutional players who face challenges when moving assets between crypto holdings on exchanges and brokerage accounts due to slow processes and high friction levels, according to Matt Kunke at BlackRock.
