Stablecoins Gain Momentum as Key Tool for Global Payments and Financial Inclusion

The equity markets closed over the weekend, crypto was among the first asset classes as usual to react to the latest US Iran updates.

Now the majors losing momentum after BP JD Vance announcing no ceasefire agreement was reached.

Crypto also fell further on Sunday as President Trump announced the US Navy is forming a blockade around the Strait of Hormuz.

And as we enter a new trading week, Bitcoin has been below the $80,000 level for.

2 straight days.

Joining me this morning to weigh in is Michael Kazley, CEO of Stablecoin Development Corporation.

Mike, good morning.

Thank you so much for joining us.

While crypto has shown strength since the US-Iran war broke out and it's actually higher, but the price action still swings based on key developments here.

So tell us what your thoughts are on how the macro environment is impacting digital assets.

Good morning.

Thanks so much for having me.

I'm excited to be here.

Um, the macro environment here, I think on risk on markets, we're looking for inflation, further Fed signaling, liquidity, and overall the impact of AI on productivity and employment.

Within the digital asset market, I think we're sharply attuned to regulatory developments, tokenization, and the growth of real-world assets.

We've seen in the crypto markets the transition away from pure speculation.

And into a more comprehensive and sustainable business models.

The crypto market is focused on things like buybacks, revenue attributed attributable to token holders, um, and other key indicators of institutional adoption.

And one area of the market I do want to hone in on is stablecoins.

So stablecoins have been making it easy for people in developing countries to shift away from their local currency to digital US dollars.

So what are the implications for our nation states, especially amid the rising geopolitical tensions that we're seeing right now, as well as for economies within some of these nations.

Yeah, that's been one of the first use cases of stablecoins is easy cross-border payments and remittance.

It's much cheaper, more seamless, 24/7, and more programmable rails.

Um, we've seen a lot of developments here even within the United States of making this a more serious, um, and recognized investment category.

Recently, uh, the Genius Act is the first comprehensive US federal, uh, law for stablecoins.

It's been much awaited within the industry and often discussed.

Uh, it requires 1 to 1 backing of stable coins with high quality.

Liquid collateral, uh, monthly disclosures, AML compliance requirements, and so this has really been a signal for the market that stablecoins aren't just a piece of the crypto landscape, but more uh have the opportunity to represent a piece of the digital financial infrastructure here within the United States and abroad. and Mike speaking of signal, the stablecoin market has surpassed $316 billion in total supply as of March of this year.

So with some of those regulatory shifts taking place that you mentioned, we do seem to be entering a new era where countries battle to control the world's digital money.

But how do you see the dynamics actually reshaping global trade in the long term?

Yeah, sure.

I mean, even 6 years ago, the total market cap was $5 billion of stablecoins.

Today, they're in excess of $300 billion as you mentioned.

Uh, we see further growth.

This is signs of secular growth.

Uh, to your point, there is a battle here, where banks are lobbying against the ability for stablecoins to have idle deposits that earn rates of return.

We've seen a lot of signals between Circle's IPO, um, and just the Overall growth pattern that signals stablecoins are here to stay, as they get further regulated, they're going to transition from being just one piece of the crypto market into a more substantial use case for all sorts of financial services, be it trading, payments, settlement, um, and stable value for DI collateral.

IPO last year, but when we look at the outlook moving forward, what kind of digital asset businesses do you think will be successful given increased expected institutional adoption?

Yeah, uh, at, at my company, we focus primarily on yield bearing stablecoins, which I think is an interesting carve-out.

Within this $300 billion of stablecoins, only $20 billion are really yield bearing in the sense that they have native yield requiring active participation.

And so, I think this is a category that can be further expanded.

Uh, the market in general and DI is hunting for yields, uh, and we're sitting at the intersection here looking to invest for the long term, uh, in this sub-asset class.

And you mentioned Yil, and that is a conversation that is unfolding on uh in the nation's capital, and here on Wall Street, we're paying attention to that.

So less than 60 seconds, what are your expectations for progress when it comes to the conversation on yield?

Yeah, I think the conversation on Yield really boils down to are these affiliates rewards programs or is this active participation in a protocol like Sky, we're seeing a $15 billion collateral pool up against $11.5 billion of stable coins issued.

And so the question is, can you generate resilient, real returns that can fund a system like this that aren't fragile, that are sustainable, that are scalable, importantly, and so we have our eyes wide open for opportunities um where, where yield-bearing stablecoins can flourish.

Well, Mike, we will have to leave it there for today, but thank you so much for joining us and thank you so much for sharing all of your insights.

Thank you for having me.