As a seasoned researcher with a penchant for deciphering the intricacies of the financial world, I find myself increasingly intrigued by the burgeoning stablecoin market and Revolut’s recent foray into this domain. With my years of experience studying the dynamics of the global financial system, I can confidently say that the demand for stablecoins is not just a fleeting trend but a significant shift in how we perceive and utilize digital currencies.
Stablecoins, with over $150 billion in assets like Tether’s USDT, Circle’s USDC, and other similar fiat-backed tokens, have become a significant segment within the cryptocurrency market. Notably, Revolut has chosen to enter this thriving sector.
Currently gaining traction, Revolut is preparing to follow in the footsteps of PayPal by introducing their very own stablecoin into the market.
Revolut Joins Stablecoin Race as Demand Soars Despite Risks
Revolut, recently granted a UK banking license and currently appraised at an impressive $45 billion, has made significant strides in creating its very own stablecoin.
According to a Revolut spokesperson:
In our efforts to broaden our cryptocurrency services, we prioritize compliance above all else, given our status as a regulated financial entity. Our aim is to establish Revolut as a reliable and safe haven for the entire cryptocurrency user base.
A current investigation conducted by the Centre for Economics and Business Research in collaboration with BVNK reveals that across 17 different nations, both businesses and consumers are typically charged a surcharge of about 5% more than the standard U.S. dollar exchange rate when acquiring stablecoins.
In some countries, like Argentina, that premium could be as high as 30%. Premiums paid by these countries are expected to reach almost $5 billion this year, swelling to as much as $25 billion by 2027, which would suggest a developing thirst for stablecoins.
However, it’s important to note that stablecoins aren’t free from disputes. In fact, a significant portion of crypto-related fraudulent transactions last year was linked to stablecoins, according to Chainalysis. Moreover, over 80% of payments made to sanctioned entities were carried out using these tokens.
More recently, some have suggested that Tether (USDT) could pose a significant challenge for the BRICS Group as they seek to challenge the dominance of the U.S. Dollar.
Why Everyone Wants a Piece of the Stablecoin Pie?
As a crypto investor, I’ve noticed an increasing appeal for stablecoins recently. A survey conducted by YouGov, commissioned by Visa and others, revealed that among 500 cryptocurrency users across five emerging markets, stablecoins – primarily pegged to the US dollar – are proving to be a cornerstone in the crypto sphere.
Among the participants, approximately 47% mentioned that they primarily utilize stablecoins to gain access to U.S. dollars, while around 43% highlighted more favorable exchange rates, likely referring to transactions with the U.S. dollar, and about 32% indicated cross-border payments, which typically involve the use of the U.S. dollar as well.
At present, global funds transfers rely on a conventional banking network which is safe yet costly. Services such as SWIFT divide transaction information from the actual transfer of funds—using systems like Fedwire—and these two processes need to be matched up, leading to potential inefficiencies and delays.
The thrill of transferring funds directly online isn’t primarily about an ideal, but rather the potential for significant cost reductions. This is one reason why establishments like JPMorgan Chase have developed their own blockchain technology and launched programmable digital dollars. It’s a strategic decision because, in financial services, regulatory frameworks enable established players to leverage scale and influence to delay disruption while they prepare their innovative responses. It could be that the bank’s heavy credit card debts have stimulated these types of ideas.
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2024-09-19 22:31