Insights on Stablecoins by Aishwary Gupta
Aishwary Gupta, who leads Payments and Risk Weighted Assets globally at Polygon, has expressed his views on the burgeoning trend of stablecoins, suggesting that they are on the brink of a transformative phase he refers to as a “super cycle.” Gupta projects that in the coming five years, the number of entities issuing stablecoins could surpass 100,000 globally.
Global Developments and Economic Independence
Notably, he pointed to Japan’s recent experiments with stablecoins like JPYC in government bond operations and various policy stimulus initiatives. Gupta emphasized that these digital currencies have the potential to bolster economic independence for nations, positioning them as tools that can complement rather than challenge the roles of traditional central banks. Like conventional fiat currencies, he explained, the value of stablecoins is subject to monetary policy influences and can positively affect international demand for a nation’s currency, akin to how the U.S. dollar has benefitted from stablecoin adoption.
Concerns for the Traditional Banking System
However, Gupta raised concerns regarding the impact of stablecoins on the traditional banking system. He warned that the enticing returns offered by these digital assets may siphon low-interest deposits away from banks, thereby impairing their capacity to generate credit and maintain low-interest capital resources. To counteract this trend, Gupta anticipates that banks may start rolling out “deposit tokens” in significant volumes. This strategy would help banks keep funds within their systems while still enabling clients to utilize blockchain assets.
The Future of Payment Frameworks
Furthermore, as the stablecoin market continues to grow exponentially, Gupta foresees a future where payment frameworks will depend on an integrated settlement layer. Such a system would facilitate transactions in which users could pay with any digital token, while merchants could receive payments in different tokens, all handled through an automated conversion process behind the scenes.
