Stablecoin: Genius Act Part Duex Hot Take

Hey, GonzoBankers. Tony DeSanctis back with another hot take, GENIUS Act part two.

So the GENIUS Act is making its way through Congress. Looks like it might end up on the president’s desk here coming up soon.

So stablecoin legislation will be much more structured. Folks, including financial institutions, can get into stablecoin. What are the implications, and where does it fit into the ecosystem?

I wanted to take a little bit of a different approach this time. We had a good group chat here at Cornerstone that I wanted to kind of share some thoughts on.

Ron Shevlin, our chief research officer, pictured here, brought up a couple of good points as it relates to disruption and some of the opportunities that stablecoin solutions or stablecoin banks present.

The first is on the economic side. So stablecoin providers that are already in the market, USDC, PayPal and others, are already paying what I would call competitive interest rates, 3.5% to 4%, in some cases higher, on those deposits, which again presents a challenge for us as bankers in the space.

The GENIUS Act gives not only that competition credibility because there’s a regulatory framework around it, but it also puts us in a position where we have to decide if we’re going to be a part of that stablecoin ecosystem.

The other component of this that gets interesting is obviously the most practical use case for stablecoins is going to be cross-border transactions, right?

So I don’t need SWIFT. I don’t need wires. I can actually move money using stablecoin and blockchain technology.

So for international transactions, remittances back to home countries for immigrants, those types of things, there are opportunities.

The stablecoin market is already massive. We’ve got $6.6 trillion in volume in the last year, $240 billion in total stablecoins in the marketplace today and 1.4 billion transactions in the last 12 months.

So it’s important for us as banks and credit unions to make a decision on how we’re going to approach this market.

Obviously, a lot of this volume today is international, but as more and more domestic transactions start to take place across these stablecoin platforms, we need to make sure we understand that the deposit disruption is real, the transaction disruption is real, and we need to make sure we’ve got a cohesive strategy around it.

So let me know in the comments, what are you thinking, and how are you thinking about stablecoin strategy?

Assuming the GENIUS Act gets approved, how are you going to pivot? What’s your approach going to be?