The Future of Stablecoins

With the European Union’s Markets in Crypto-Assets Regulation framework coming into place and pro-crypto politicians entering office in the U.S., experts foresee a renaissance in the stablecoin industry. This insight emerged during a panel discussion at The Block’s Emergence conference.

Market Fragmentation

Vishal Gupta, founder of True Exchange and former head of USDC at Circle, noted, “You're going to see a lot more fragmentation in the market…a proliferation of stablecoins,” as the industry expands beyond USDT and USDC.

Kevin Tharayil from the Celo Foundation reflected on the ease of launching stablecoins, likening it to launching a memecoin on Pump.fun. He predicted an explosion of “regional stablecoins” catering to local currencies, which is already evident on the Celo blockchain with projects like Mento, supporting assets pegged to various regional currencies.

Tokenizing the Euro

Eduardo Morrison, a former Binance executive, expressed interest in tokenizing the euro, highlighting the untapped potential in establishing cross-border payment corridors between regions like Latin America and Europe.

Dominance of the Dollar

Historically, the stablecoin market has been dominated by USD-pegged tokens, which has created opportunities and challenges. Gnosis co-founder Friederike Ernst pointed out, “Stablecoins are not primarily a product for the global north,” emphasizing the need for diverse currency options worldwide.

Diversifying Currency Options

Ernst argued against solely focusing on USD, addressing the need for local currencies in global trade, illustrating with an example of a Kenyan farmer selling coffee to an Egyptian merchant.

New Currency Models

Ernst revealed Gnosis' upcoming project, Circles, aimed at enabling individuals to create their own currencies. Meanwhile, Tharayil noted that decentralized autonomous organizations (DAOs) might mint their own stablecoins, raising concerns about distinguishing between safe and unsafe tokens.

Conclusion

Panelists agreed that a USD Central Bank Digital Currency (CBDC) is unlikely to gain acceptance, with Gupta stating, “No one would want to use it.”