PayPal Exec: Banks Key to Stablecoin Growth as US Regulation Nears

Jose Fernandez da Ponte, PayPal’s senior vice president of digital currencies, emphasized the necessity of banks in the crypto space for stablecoins to achieve their full potential. Speaking at a panel discussion, he highlighted that the infrastructure provided by banks, including custody and fiat rails, is crucial for stablecoins to scale beyond their current crypto-native circles. He stressed the importance of connectivity and integration with traditional financial systems for stablecoins to succeed.

Fernandez da Ponte's comments come at a time when regulatory clarity for digital assets in the U.S. is being actively pursued. Lawmakers are moving closer to passing stablecoin legislation that could reshape the market and allow banks to enter the space. This regulatory framework is seen as a significant step forward, addressing trust issues and providing a clearer path for stablecoin adoption.

Anthony Soohoo, chairman and CEO of MoneyGram, echoed Fernandez da Ponte's sentiments, noting that stablecoin legislation will answer many of the trust-related questions that have hindered wider adoption. Both executives anticipate a surge of new issuers entering the market once regulations are in place, followed by a period of consolidation. Fernandez da Ponte clarified that the success of stablecoins should not be measured solely by market capitalization but by metrics such as velocity, active wallets, and the number of transactions, which drive real usage.

In regions with high inflation and volatile currencies, consumers are increasingly turning to dollar-backed stablecoins as a means to store value and facilitate cross-border payments. MoneyGram, with its extensive network of cash-access locations, is playing a key role in providing access to these stablecoins. Soohoo highlighted that many consumers in local economies prefer to hold value in dollars but still need cash for transactions in places that do not accept digital currency.

In contrast, the adoption of stablecoins in developed countries has been slower. Fernandez da Ponte noted that with clear regulation, stablecoins can streamline corporate treasury operations and cross-border disbursements. He cited examples of sending money to the Philippines and Africa in just ten minutes using stablecoins, illustrating the efficiency and speed that stablecoins can bring to financial transactions.

Both executives agreed that the real-world use cases, rather than hype, will determine the future success of stablecoins. Fernandez da Ponte emphasized that consumers are more interested in solving problems than in the technology itself. He noted that the industry is currently five years into a ten-year journey, with regulation playing a pivotal role in defining the next half of this journey.