Stablecoins to take over TradFi after Genius Act approval

Stablecoins are slowly but steadily moving into traditional finance (Tradfi) and the financial mainstream, more so after the President Donald Trump-led US administration signed the GENIUS Act into law. 

The Guaranteeing U.S. Exchange Neutrality for Interconnected and Universal Stablecoins Act, passed in July, is a federal framework that has given institutions and banks clarity on how to issue stablecoins. 

According to CoinGecko data, the global market for these assets is now valued at $294 billion. Coinbase economists predict the industry could reach $1.2 trillion by 2028.

The market is undoubtedly expanding, but Ripple executive Jack McDonald believes not every project meets the standards required for an interoperable, compliant and transparent stablecoin. Many tokens, he argues, are developed for purely hype, which in turn limit their potential.

Ripple executive wary of short-sighted stablecoin issuers

McDonald, who is the chief executive of Standard Custody & Trust Co. and senior vice-president for stablecoins at Ripple, said many current projects lack vision. Pouring his sentiments in an insight published on Ripple’s website on Wednesday, McDonald reiterated that stablecoins should not be treated as “just a marketing initiative.”

Stablecoins carry responsibilities of trust, compliance, and scale. Tokens focused on loyalty programs, gaming economies, or closed ecosystems often fall short of this,” he wrote.

The Ripple stablecoins SVP coined the hype-based stablecoins as “isolated islands of value” that fail to connect with broader financial systems, and lack the liquidity, portability, or utility sought in real-world payments.

McDonald explained how stablecoins thrive in jurisdictions where financial infrastructure is considered “limited or inefficient” by world standards, because they can bridge access to the US dollar, lower the cost of remittances, and make faster settlements than the slow and expensive banking networks.

“The benefits are tangible and measurable,” McDonald continued, “This is where stablecoins can unlock real economic value, and where the need is greatest.”

Moreover, he asserted that stablecoins can only succeed if they are interoperable across platforms and networks, transparent about reserves, and capable of scaling as core infrastructure. 

“These are prerequisites for mainstream adoption and the stability that the term ‘stablecoin’ implies,” the Standard Custody CEO surmised.

Concluding his insight, McDonald listed Ripple USD (RLUSD) as the example of a compliance-first token, fully backed 1:1 by U.S. dollar reserves held in reputable US banks. 

As reported by Cryptopolitan during launch, RLUSD is issued under the supervision of the New York Department of Financial Services and is built on both the XRP Ledger and Ethereum. Ripple says this dual-network issuance makes it flexible for cross-border payments, in tandem with enterprise-grade compliance standards.

The UK wants to control stablecoins

The stablecoin discussion was also part of The Rollup Podcast’s interview earlier this month with David Grider of Finality Capital, who said “the most interesting thing happening in crypto is TradFi convergence and the unshackling of regulation,” 

“That’s what’s allowing companies to do DATs and Hype to get their own stablecoin, and it’s also allowing tokenization you are seeing today with Nasdaq. I feel this is pretty exciting for everyone,” the Finality Capital partner reckoned.

While the US has created room for stablecoin issuers to thrive, the Bank of England is proposing limits on how many stablecoins individuals and businesses can hold.

According to the UK’s central bank, systemic stablecoins could weaken the banking system by draining deposits if left unchecked. Its plan would cap individual holdings at between £10,000 and £20,000, while businesses could be restricted to £10 million.

Officials said they intend to press ahead with the policy to “safeguard financial stability,” but for crypto and payments groups, it would leave the UK lagging. 

“Imposing caps on stablecoins is bad for UK savers, bad for the City and bad for sterling,” said Tom Duff Gordon, vice-president of international policy at Coinbase.

The Financial Conduct Authority’s research shows that 93% of UK adults have heard of crypto, and seven million people own some form of it. “Capping stablecoin holdings is how you drive capital away,” complained one naysayer of the BoE’s proposed stablecoin cap on X.

Your crypto news deserves attention - KEY Difference Wire puts you on 250 top sites