Here is our pick of the 3 most important stablecoin stories during the week.
How much can having your own stablecoin be a competitive advantage?
It seems if you’re an exchange or even a country, quite a lot is the answer. This week we saw the emergence of stablecoins as a tool to attract, hold and monetise monetary flow.
First, Coinbase has come up with a plan to make itself super attractive to MakerDAO by offering to generate $24 million annually for them. The American crypto exchange recently proposed that the popular DeFi project deposit $1.6 billion in USDC on Coinbase institutional, the exchange’s institutional arm, and earn 1.5%.
Coinbase’s Stablecoin Proposal Expected to Earn MakerDAO $24M Annually – Decrypt
In the meantime, Russia has decided to use stablecoins The western sanctions are clearly hurting Russia, just as the sudden drop in gas supplies is hurting Europe. Russia’s problems are even more immediate. The embargo of dual-use electronic goods is causing serious supply shortages for Russia’s military. Vladimir Putin is in bad need to transact. So the news of the country developing a crypto payment system is important.
And finally, the world’s largest cryptocurrency exchange Binance’s move to toss USD Coin (USDC) off its platform is a bold gambit to boost the fortunes of its own stablecoin, Binance USD (BUSD) — the third-biggest stablecoin by market cap, following USDC in second place and Tether in the top spot. And the fact that it comes amid reports that Binance is undercutting the fees charged by its main exchange rival, Coinbase — the second-largest crypto exchange in the business — suggests that Binance is making a concerted push for next-level dominance of the crypto space.
So in summary, a stablecoin that you control will improve your balance sheet (enabling more and cheaper corporate borrowing), enable a new revenue stream, incentivise customers (something like a loyalty programme) and in the case of Russia enable you to have more freedom and operate alone within your ecosystem.
The fun and innovation in this space is just beginning!
Alan Scott is an expert in the FX market and has been working in the domain of stablecoins for many years.
We have a self imposed constraint of 3 news stories per week because we serve busy senior Fintech leaders who just want succinct and important information.
For context on stablecoins please read this introductory interview with Alan “How stablecoins will change our world” and read articles tagged stablecoin in our archives.