Stablecoins Struggle to Gain Traction Despite Proposed Legislation
The prospects for the CLARITY act, which aims to provide clarity on stablecoins, look uncertain. With Congress going on vacation soon, it's unclear whether the bill will be voted on before summer break.
Even if the act passes and is signed into law, that would only be the beginning of the process. Banks are not eager to compete with crypto upstarts, but a competitive analysis shows that stablecoin issuers have a long way to go before they can gain traction with consumers.
The introduction of U.S. law has raised barriers to entry for stablecoin issuers. This means that anyone wanting to offer a stablecoin will need to abide by these laws and hire lawyers, making it a slightly more difficult process.
The bargaining power of suppliers is not a constraint in this market due to the open-source nature of the code. However, customers have substantial bargaining power as they can easily move their money without needing to visit a bank branch.
Despite this, nearly 60% of banks' deposit bases are made up of 'sleepy deposits,' which are unlikely to switch to stablecoins anytime soon.