{"id":363290,"date":"2025-12-21T22:16:15","date_gmt":"2025-12-21T22:16:15","guid":{"rendered":"https:\/\/www.newsbeep.com\/au\/363290\/"},"modified":"2025-12-21T22:16:15","modified_gmt":"2025-12-21T22:16:15","slug":"the-393-billion-crypto-craze-that-could-one-day-threaten-banks","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/au\/363290\/","title":{"rendered":"The $393 billion crypto craze that could one day threaten banks"},"content":{"rendered":"

Trump this year gave the sector a shot in the arm, with July\u2019s GENIUS Act, which created a regulatory system for stablecoins, ensuring reserve requirements and subjecting issuers to anti-money laundering rules. Trump, who\u2019s made plenty of money from crypto, said at the time the bill would make America \u201cthe UNDISPUTED Leader in Digital Assets \u2013 Nobody will do it better, it is pure GENIUS!\u201c.<\/p>\n

But it\u2019s not just Trump: Europe, Hong Kong and Singapore have also announced or implemented plans to regulate the sector, and Australia is working up its own crypto regulations.<\/p>\n

Today, stablecoins are mostly used when people who are trading crypto assets want to settle in traditional money \u2013 which hardly sounds like a game-changer to most of us.<\/p>\n

But a recent paper by the IMF explores how they could have more and more real-world uses, as opposed to bitcoin, which is most useful as a speculative asset<\/a>.<\/p>\n

The most obvious area where stablecoins could be useful is in international money transfers, which are notoriously slow and expensive. When you send money overseas, it normally travels through a system known as \u201ccorrespondent banking\u201d, whereby your local bank talks to a foreign bank to settle the payment. The IMF says stablecoins \u2013 which are held on the \u201cblockchain\u201d \u2013 could do this job far more quickly and cheaply.<\/p>\n

Facebook tried something similar<\/a> last decade when it planned to develop its own cryptocurrency, before abandoning the attempt in 2022 \u2013 but this year there have been reports that its owner Meta is considering another go at a stablecoin.<\/p>\n

Over the longer term, the IMF argues stablecoins could expand further and into domestic retail payments for goods and services \u2013 though it\u2019s harder to see that happening soon in Australia, where we already have near instant free payments between bank accounts.<\/p>\n

\"Bitcoin<\/p>\n

Bitcoin is used as a speculative asset, but experts say stablecoins could help to make international payments cheaper.Credit: Bloomberg<\/p>\n

But they could be more appealing in less developed economies, and there have been predictions of rapid global growth in stablecoins, including one paper cited by the RBA that forecast stablecoins could be worth $US4 trillion by 2035.<\/p>\n

In short, there\u2019s a real chance stablecoins could be a worthwhile innovation that makes payments more efficient \u2013 which is a good thing. However, their rapid growth is also stoking concerns about financial risks that could arise.<\/p>\n

First, stablecoins can be used to help criminals launder money. Indeed, the IMF said they pose more \u201cheightened\u201d money-laundering and terrorism-financing risks than other cryptocurrencies because of their perceived stability.<\/p>\n

Second, the RBA has said that if stablecoins continue to grow as projected, they\u2019ll become big enough to \u201cmaterially affect the functioning of the market\u201d for short-term US Treasury bonds, which are an important benchmark for US interest rates. \u201cA sudden decline in sentiment towards stablecoins could trigger asset fire sales with the potential to spill over into repo and other core US funding markets,\u201d the RBA says.<\/p>\n

Third, some think stablecoins could challenge traditional banking. If stablecoins gain wide appeal, and they\u2019re bought with funds deposited in banks, it could also force banks to find new types of funding.<\/p>\n

Jarden analyst Matt Wilson says that unlike bitcoin, stablecoins represent a real threat to banks because they can operate as an alternative form of digital money.<\/p>\n

Digital money already exists in banks (most deposits are digital, not cash) but this digital money can be moved only through a system of deposits. And to accept deposits, you need a banking licence. Stablecoins could in theory perform the same functions as money, but without the need for banks acting as intermediaries.<\/p>\n

\u201cIt\u2019s another representation of [digital money] but you don\u2019t need to be a bank to have stablecoins or accept stablecoins,\u201d Wilson says. \u201cIt\u2019s a serious threat, given it could become a genuine alternative to a deposit and a payment.\u201d<\/p>\n

When could this happen? That\u2019s the big question, and no one knows the answer.<\/p>\n

Trump\u2019s bill banned stablecoin issuers from paying interest, making these assets less of a short-term threat to savings accounts.<\/p>\n

Loading<\/p>\n

But Wilson says issuers can work around this, and he says stablecoins could one day threaten both bank deposits that earn interest, and transaction accounts that typically pay no interest, giving banks cheap funding.<\/p>\n

\u201cWe may not need to have a bank account to get paid. We could have a digital wallet that Google or Apple could supply,\u201d Wilson says.<\/p>\n

\u201cI think it\u2019s a genuine threat to the banks. It could be three years, it could be in five years, but I think the direction is clear.\u201d<\/p>\n

To be sure, these are possibilities that are probably too long-term and uncertain for most investors to be thinking about today. And in Australia, the value of stablecoins is currently tiny, so it looks like they are a long way from taking off here.<\/p>\n

But then again, these changes can happen in unexpected ways. As Wilson says: \u201cDid we ever think we would happily use a mobile phone to buy coffee, document our life to all, and bank, among other things?\u201d<\/p>\n

Expert tips on how to save, invest and make the most of your money delivered to your inbox every Sunday. Sign up for our Real Money newsletter<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"Trump this year gave the sector a shot in the arm, with July\u2019s GENIUS Act, which created a…\n","protected":false},"author":2,"featured_media":363291,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[43,44,41,39,42,40],"class_list":{"0":"post-363290","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-headlines","8":"tag-headlines","9":"tag-news","10":"tag-top-news","11":"tag-top-stories","12":"tag-topnews","13":"tag-topstories"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/363290","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=363290"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/363290\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/363291"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=363290"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=363290"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=363290"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}