Opinion: Morgan Krupetsky, VP of On-Chain Finance at Ava Labs
Following the passage of the GENIUS Act, the next era of stablecoin use is being driven by a growing constellation of fintechs and neobanks who are integrating stablecoins into their product and service offerings and expanding into areas deemed economically or operationally infeasible with traditional systems, thereby increasing their competitiveness.
These challenger systems offer a direct way for people and businesses to more easily access and store stable value in their mobile wallets. Overcoming financial stability concerns surrounding hyperinflation and currency fluctuations. To carry out remittances and other cross-border transactions. To access credit and savings. And ultimately, you end up spending down or against your holdings in real time.
This ability to access, earn, and spend programmable money created the operational order of stablecoins. This is a strategy that truly democratizes financial access and enables broad economic inclusion.
Stablecoins allow access
First, stablecoins offer clear and fundamental advantages in terms of financial access. These provide an easy and immediate addition to the US dollar, as over 1 billion adults are still excluded from the financial system.
Particularly in the Global South and emerging markets, currencies serve as stable alternatives to potentially unstable local currencies and reliable stores of value.
For companies and individuals suffering from currency fluctuations, stablecoins have been a game-changer. In Argentina, where inflation rates exceed 100% annually, small businesses and freelancers increasingly rely on USDC and USDT to invoice international customers, pay salaries, and protect profits.
In Latin America alone, stablecoins account for almost 30% of remittances in certain corridors. At the same time, other countries such as Turkey use USDT as a hedge against the risk of inflation and currency depreciation.
Fintechs are stepping in to provide historically underserved individuals and businesses with access to U.S. dollars and, in some cases, banking services, entering areas where traditional systems were considered economically, operationally, or technically unfeasible.
ability to earn
With a stablecoin market capitalization of over $265 billion, the “earn” proposition of stablecoins marks the next stage in their evolution. To this end, many of these same fintechs and neobanks are also integrating blockchain-enabled products and services that allow customers to earn or receive rewards on their stablecoin holdings.
Related: Western Union selects Solana for stablecoin and crypto network
In some cases, crypto exchanges integrate DeFi borrowing/lending platforms directly into their exchange or non-custodial wallet products, allowing users to earn money by lending their stablecoins. Companies may also be able to take advantage of the growing ecosystem of tokenized money market funds.
This feature is a powerful antidote for people suffering from high inflation or who have limited access to traditional savings vehicles. In emerging and developing countries, where only a quarter of adults use a savings account, people underserved by traditional banking infrastructure can now more easily make their money work for them.
In Nigeria, PhoneBank allows users to exchange their earnings into dollar-denominated stablecoins and access on-chain savings products that offer yields far above local bank interest rates. These tools allow users to preserve value through their mobile phones, earn passive income, and avoid local currency devaluation.
As mobile and global internet penetration continues to increase, fintechs have an opportunity to not only catch up but also surpass certain incumbents.
when you have time to spend
The ultimate goal of stablecoins is to become the primary medium of exchange, allowing users to transact without moving to a fiat economy. In this “spending” phase, Moving from digital assets to more ubiquitous payment tools.
The platform already enables this with stablecoin-backed cards, allowing users to make instant, low-cost cross-border payments and everyday purchases with just a tap and pay anywhere Visa is accepted. For emerging and developing markets, this provides an important way to avoid high transfer fees, slow bank transfers and limited banking access, fundamentally improving financial inclusion.
Some companies are layering cryptocurrency and stablecoin rewards programs to create everyday spending methods to further drive digital adoption and engagement.
From “crypto casino” to real-world utility
After all, while the global debate continues over the classification and utility of stablecoins, a new financial system that is efficient and inclusive is already being built. Fintechs and neobanks have already demonstrated that stablecoins are an essential part of expanding their global operations, offering entirely new assets and capabilities through evolving storage, acquisition, and payment capabilities.
Stablecoin adoption is rapidly becoming a reality, demonstrating the undeniable value of programmable money beyond crypto casinos.
Already, stablecoin transfer volume in 2024 will exceed the combined transfer volume of Visa and Mastercard. Once seen primarily as a vehicle for speculation and liquidity trading, stablecoins are rapidly becoming something more fundamental: programmable money that can serve as the backbone of responsible global digital finance.
Commenter: Morgan Krupetsky, VP of On-Chain Finance at Ava Labs.
This article is for general informational purposes only and is not intended to be, and should not be taken as, legal or investment advice. The views, ideas, and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
