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he sent back against the idea that stablecoins pose a major risk for US banks.
According to the company, these concerns overlook how stablecoins are actually used and who uses them.
On October 29, Coinbase’s head of policy, Faryar Shirzad, he said concerns that stablecoins are damage the bank loans are misplaced. He explained that most people using stablecoins are outside the United States.
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These users are not withdrawing money from local banks, they are using stablecoins to hold dollars in places where the local currency may be unstable.
Coinbase explained that the the demand for stablecoins mainly comes from overseas markets. In countries where people face currency instability or lack access to reliable banks, dollar-based stablecoins offer a way to hold value and make transactions.
The company also noted that concerns about stablecoins pulling deposits from banks are not new. They compare this with past reactions to money market funds, which were also seen as a threat when they were first introduced.
According to Coinbase, about two-thirds of stablecoin activity occurs on blockchain systems which operate independently of traditional banks. This shows that technology is supporting new types of financial networks, rather than replacing old ones.
Shirzad also addressed claims that small community banks would be hardest hit. He said that stablecoin users and community banking customers rarely overlap.
Recently, Coinbase announced plans to add private transaction functionality to its core network. What did CEO Brian Armstrong say? Read the full story.
