Stablecoins could suck US$1 tril from EM banks in next three years, StanChart estimates

About 99% of all stablecoins are pegged to the dollar, which economists say effectively makes them dollar-based bank accounts and increasingly attractive in parts of the world prone to currency crises.

Standard Chartered, a bank renowned for operating in developing economies, said the desire to avoid savings being wiped out will drive individuals and companies to put their money into stablecoin wallets instead of banks.

While new US crypto laws aim to mitigate deposit flight by prohibiting US-compliant stablecoin issuers from paying direct yields — the equivalent of an interest rate on a bank account — Standard Chartered said that emerging market populations will still want them.

“Return of capital matters more than return on capital,” the bank said, estimating that current trends point to the use of stablecoins as savings across developing economies jumping to US$1.22 trillion by the end of 2028, from around US$173 billion now.

They include Egypt, Pakistan, Bangladesh and Sri Lanka which have all suffered currency crashes in recent years, Kenya and Morocco and heavyweight emerging economies such as Turkey, India, China, Brazil, South Africa.

Source: Theedgemalaysia