BoA: Stablecoin Will Make These 4 Sectors The Biggest Winners In The Market

Recently, stablecoins have experienced rapid growth, becoming a global focal point. Bank of America points out that four market sectors are poised to benefit from the stablecoin boom.

The U.S. Congress's "Crypto Week" kicked off this Monday, with lawmakers planning to review three key cryptocurrency bills this week, including the GENIUS Act.

The stablecoin bill passed the U.S. Senate last month. It aims to establish the first federal regulatory framework for stablecoins, encouraging broader adoption and integration into traditional payment systems. If the bill passes the House and is signed into law by the U.S. President, it is expected to spur a wave of new stablecoin participants.

However, in a procedural vote on Tuesday, conservative Republicans in the U.S. House successfully blocked the progress of three cryptocurrency bills, including the stablecoin bill.

Although stablecoin technology is still in its early stages, Bank of America is focusing on several key sectors that could benefit as the market develops and evolves.

Ebrahim Poonawala, Head of North American Bank Research at Bank of America, suggests that for investors interested in stablecoins, investing in the "picks and shovels" (related foundational supporting sectors) of the technology might be a wise move.

At the core of stablecoin technology lies the cryptocurrency Ethereum. Ethereum is crucial to stablecoin technology because it supports programmable tokens, a key feature that underpins the smart contracts on which stablecoins rely. Over half of existing stablecoins operate on Ethereum, making it a critical component of the ecosystem for these fiat-backed tokens.

Over the past month, Ethereum's price has risen by more than 18%, partly due to optimism about the prospects of stablecoins.

Traditional banks like JPMorgan and Bank of New York are betting on stablecoin technology and could benefit from stablecoin-friendly legislation. In June, JPMorgan launched its own deposit token, JPMD, which runs on an Ethereum-based blockchain developed by Coinbase.

Meanwhile, Bank of New York partnered with blockchain payment company Ripple on July 9 to serve as the primary reserve custodian for Ripple's dollar-backed stablecoin, ensuring its reserves are securely held by a major global bank.

Bank of America notes that payment companies like Visa, Mastercard, and PayPal could also benefit from the rise of stablecoins. These firms have been developing stablecoin capabilities for years, allowing them to integrate the new technology into existing infrastructure.

Mastercard has been building blockchain functionality since 2015. In 2021, Visa completed its first USDC (Circle's USD Coin) transaction. PayPal introduced its own stablecoin, PayPal USD, as early as 2023. In April, Mastercard announced an "all-in-one" stablecoin payment solution aimed at enabling 1.5 million merchants worldwide to accept stablecoin payments.

Shopping and payment services like Shopify represent the final sector highlighted by Bank of America. The e-commerce platform announced plans to collaborate with Circle to introduce USDC payments and expand its crypto settlement options.

According to Poonawala, cross-border payments could be a prominent use case for stablecoins in the payments sector. He believes Shopify's stablecoin functionality will make it easier for merchants to connect with global customers.

Poonawala states that fully establishing the infrastructure needed for widespread stablecoin adoption could take three to five years. However, with a favorable legislative environment and increasing attention from traditional banks and payment companies, stablecoins may become a disruptive force in the coming years.