Big banks are scaring stablecoin issuers saying that it could spell an early demise for centralized stablecoin issuers.
The Co-founder of BitMEX and CIO at Maelstromfund, Arthur Hayes, has stated that an influx of big banks into the stablecoin market could spell an early demise for centralized stablecoin issuers.
Amidst the anticipated traditional companies’ influx into crypto, Hayes stated that banks will start looking into issuing stablecoins themselves.
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The founder said stablecoin issuers like Tether currently back their assets with treasury bills and deposits to ensure 1:1 parity with the US dollar.
To do so, the issuers rely on banks to take their deposits and allow them to trade debit instruments.
Ultimately, Hayes said stablecoin issuers cannot exist without a bank holding or clearing their funds.
Furthermore, Hayes argued that given the profit margin of companies like Tether, it is only a matter of when before big banks start looking into the stablecoin market.
The founder stated that the lack of a defensible business by stablecoin issuers and their reliance on the banks for the custody of their funds makes this more probable.
At present, Tether is the largest stablecoin issuer with over $91 billion USDT in circulation, according to data from CoinMarketCap.
The market cap of the stablecoin makes it the third-largest in the world, far outsizing altcoins like BNB, Solana, and XRP.
Similarly, Tether’s supply far outweighs that of its closest rival, Circle, which has around $24 billion in circulation.
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Data from DeFiLama estimates that the total stablecoin market is worth around $130 billion.
According to the founder, stablecoin issuers like Tether have a large market share because the big players in the US banking system have refused to participate.
However, that dominance will be put to the test should banks like JP Morgan take a deep dive.
