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Binance News
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Stablecoins' Future Hinges on Consumer Protections, Says Alchemy CTO
According to Cointelegraph, stablecoins are unlikely to replace established payment platforms like Visa and Mastercard until they incorporate strong consumer protection measures, as stated by Guillaume Poncin, Chief Technology Officer of Alchemy. Traditional payment systems provide essential features such as chargebacks, fraud protection, and dispute resolution, which are crucial for consumer trust. Poncin emphasized that stablecoin projects need to integrate these features to appeal to the general public.
Poncin suggested that consumer protection mechanisms could be embedded within smart contracts, while stablecoin issuers and payment platforms could establish insurance pools to cover fraud-related payouts. He predicted a future where traditional payment systems and stablecoins converge, with major payment processors integrating stablecoins and banks issuing their own. This integration would enhance traditional payment systems with blockchain's efficiency and introduce new use cases. Stablecoins are already gaining traction in cross-border payments and emerging markets due to their cost-effectiveness and 24/7 settlement capabilities, offering a competitive edge over traditional payment card providers.
The banking industry is closely examining the impact of stablecoins on the existing financial system. Discussions among crypto industry leaders, commercial banks, and market analysts continue regarding stablecoins' influence on traditional financial institutions. In March, U.S. banks and their Senate allies opposed stablecoin regulation during the debate over the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) bill. A key concern was the potential for stablecoin issuers to share yields from U.S. government securities backing their tokens with customers, a practice ultimately prohibited in the final legislation.
U.S. Senator Kirsten Gillibrand expressed concerns that yield-sharing could undermine the traditional banking system, affecting bank lending crucial for homebuyers and small businesses. She questioned the audience at the DC Blockchain Summit, asking, "If there is no reason to put your money in a local bank, who is going to give you a mortgage?" Despite these concerns, Jamie Dimon, CEO of JPMorgan, stated he is not worried about stablecoins replacing banks, noting that both have distinct consumer bases and will continue to coexist. Dimon remarked that some individuals might prefer holding dollars through stablecoins outside the U.S., especially in certain countries where it might be more advantageous than using the banking system.
Poncin suggested that consumer protection mechanisms could be embedded within smart contracts, while stablecoin issuers and payment platforms could establish insurance pools to cover fraud-related payouts. He predicted a future where traditional payment systems and stablecoins converge, with major payment processors integrating stablecoins and banks issuing their own. This integration would enhance traditional payment systems with blockchain's efficiency and introduce new use cases. Stablecoins are already gaining traction in cross-border payments and emerging markets due to their cost-effectiveness and 24/7 settlement capabilities, offering a competitive edge over traditional payment card providers.
The banking industry is closely examining the impact of stablecoins on the existing financial system. Discussions among crypto industry leaders, commercial banks, and market analysts continue regarding stablecoins' influence on traditional financial institutions. In March, U.S. banks and their Senate allies opposed stablecoin regulation during the debate over the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) bill. A key concern was the potential for stablecoin issuers to share yields from U.S. government securities backing their tokens with customers, a practice ultimately prohibited in the final legislation.
U.S. Senator Kirsten Gillibrand expressed concerns that yield-sharing could undermine the traditional banking system, affecting bank lending crucial for homebuyers and small businesses. She questioned the audience at the DC Blockchain Summit, asking, "If there is no reason to put your money in a local bank, who is going to give you a mortgage?" Despite these concerns, Jamie Dimon, CEO of JPMorgan, stated he is not worried about stablecoins replacing banks, noting that both have distinct consumer bases and will continue to coexist. Dimon remarked that some individuals might prefer holding dollars through stablecoins outside the U.S., especially in certain countries where it might be more advantageous than using the banking system.
Disclaimer: Includes third-party opinions. No financial advice. May include sponsored content. See T&Cs.