Stablecoins' New Competitive Advantage Is Interoperability

The stablecoin market is evolving beyond its initial phase of issuance and liquidity. A new wave of competition is emerging, driven by the need for interoperability between fragmented ecosystems.

Twenty-one major financial institutions are partnering to create a jointly backed stablecoin venture. The Securities and Exchange Commission (SEC) is also working on transfer-agent rules that will enable blockchain-based securities ownership records.

The common thread among these developments is the growing importance of interoperability. As more banks, FinTechs, and financial institutions issue their own digital money, the scarce asset may no longer be the stablecoin itself but rather the network capable of making all those stablecoins usable together.