Experts say only a few stablecoins will manage to survive this year.
In the last two years, the world has become more aware of the existence of cryptocurrencies. Central banks have shown a particular interest in them, even developing their stablecoins, more of which will arrive this year. However, many of the stablecoins that currently exist may simply disappear under a flood of better alternatives. There is no real need for more than a couple of stablecoins that are linked to the dollar as there are more than enough.
According to Jeremy Allaire, CEO, and co-founder of Circle, only a few stablecoins will manage to survive. Of course, he has included their stablecoin USD Coin (USDC) in that list, of which there are more than USD 500 million in circulation. Other rival stablecoins, such as Paxos Standard (PAX), have about half the market capitalization and the supply of Gemini Dollar (GUSD) has declined to only USD 3.7 million.
Allaire explains that, whilst the industry and the media are excited about future/unlaunched stablecoins and central bank digital currencies (CBDCs), the market speaks for itself. USDC has continued to expand (with about USD 520 million in circulation), PAX has stagnated at USD 240 million, TrueUSD (TUSD) is in rapid decline, and GUSD and Binance USD (BUSD) are already “dead.” The executive added that Tether remains the dominant force and offers USD offshore banking options for China and the rest of Asia, where it has grown in popularity. It is currently the fourth largest crypto asset, with a circulation of USD 4.8 billion, according to Tether’s transparency report. He also said that the media have remained focused on Libra and CBDCs, but that the industry will continue to develop.
This expert believes that 2020 will continue to be an important year for stablecoins, with conventional use cases based on digital currencies backed by fiat money on public chains, and DeFi will continue to expand open financing.
For its part, European Central Bank (ECB) Governing Council member, Jens Weidmann, recently urged commercial banks to develop their crypto payment solutions as an alternative to Libra, which everyone sees as a major threat.
Central banks see Libra and other third-party stablecoins, such as USDT, as competitors to their financial systems. Decentralized digital assets such as Bitcoin are an even greater threat. The number of central banks researching and developing digital currencies is growing. China is leading the pack intending to launch its Yuan crypto this year after Facebook announced its intentions. Among those following China’s lead in the CBDC race are central banks from Japan, South Korea, Thailand, Singapore, Sweden, France, and the European Union.
More central banks are likely to join this growing movement in 2020 as stablecoins and digital central bank currencies begin to infiltrate daily life and digital payments.
It can be said that a cashless society is an end goal for any government because of its surveillance properties. A side effect will be an increased awareness of crypto assets, which will also benefit decentralized ones.
By Alexander Salazar