The list keeps growing.
We are going to see an entire network of transactions taking place utilizing stablecoins issued by traditional financial institutions. It is likely that they end up linking their activities together, forming a network of finance that operates outside the traditional system yet is still housed by them.
Interactive Brokers is the latest company to look into this idea.
With the passage of the GENIUS Act in the United States, the potential for traditional banks and other institutions to enter the stablecoin market is upon us. My view is we are going to see an explosion of offerings over the next year, as most major institutions will join the race.
In spite of the regulatory clarity GENIUS provided, there is still uncertainty among many of the traditional bankers. That said, they appear to have an open mind about the potential, watching to see if adoption occurs.
Interactive Brokers Looking Into The Stablecoin Game
Interactive Brokers appears to be following the path of Robinhood. That company recently released USDG, a stablecoin on Global Dollar Network consortium.
Interactive Brokers Group Inc. is considering launching its own stablecoin for customers and enabling instant, 24/7 stablecoin funding for brokerage accounts, founder Thomas Peterffy told Reuters.
The last part is key for many of these traditional financial institutions.
At present, funding of accounts is limited to banking hours. Even though many firms offer trading in different markets, money transfers go through the banking system. Hence, even if someone in the US wants to fund trading in Japan, US banking hours apply.
Stablecoins remove this problem with 24/7 money transfer along with near instant settlement. This means the money can be available for trading within a few minutes.
The advantages are not evident to all however. Some still believe there is little value to stablecoins.
Peterffy expressed caution regarding the rapid adoption of cryptocurrencies, stating, “It’s basically hard to grasp its fundamental value. If we see people adopting it and ascribing a value to it, I’m okay with that, but I’m still not convinced.”
This mirrors the sentiment expressed by Jamie Dimon not long ago. He was in the same boat as not sold on the idea but willing to look at the potential entry for JPMorgan.
International Implications
This is bigger than simply a race between different banks. We are looking at a shift in the entire global monetary system.
At present, according to Coingecko, the stablecoin market is $271 billion. This is up from the $260 billion level just a week ago.
The US dollar is the dominant player in this realm. This has other parts of the world worried, especially the EU. Some are warning the EU risks losing monetary sovereignty.
To me, this is a done deal.
Simply put, there is no reason for multiple denominations among currencies from the user perspective. Traders obvious like the FOREX market yet that can be offset by the rise of crypto. After all, people are speculating everyday on Bitcoin versus Ethereum or Solana as compared to BNB.
Monetary sovereignty tends to mean control. It is more fallacy that anything else in my opinion since the monetary system was radically altered the last century, especially with the move to digital. The "power" of the central bank is an illusion, with monetary policy being nothing more than noise.
It is why their tactics rarely are effective.
A senior European Central Bank advisor has warned that Europe risks losing monetary sovereignty as euro-backed stablecoin(s) capture only 0.15% of the $230 billion global market.
Stablecoins really drive home the factors of digitization. When it comes to looking for a winner, the USD will reign supreme. If the forecasts of a stablecoin explosion are correct, pushing the total near $2 trillion (or more), we will see the dollar simply amass the network effects that are impossible to overcome.
Interactive Brokers might not be the largest financial institutions in the world. It does, however, have $157 billion in assets under management. This is a small amount compared to the likes of JPMorgan and Blackrock. That said, it is still a heafty sum.
A portion of that could find its way into the stablecoin market. This will simply keep the US dollar pie growing.