Will stablecoins become everyday money?
The GENIUS Act, a regulatory framework recently signed into law by US President Donald Trump, may boost stablecoins, digital currencies with values pegged to a country's traditional currency.
Here are potential uses for stablecoins, the most popular of which are Circle's USDC and Tether's USDT, both tied to the US dollar.
Money transfers
Most people who want to send money to one another, particularly across national borders, rely on services such as Western Union, Ria and MoneyGram, which charge relatively high fees for the service.
Stablecoins allow direct transactions between people, making funds instantly available to recipients, typically at lower fees.
Sending money in the form of stablecoin has the added benefit of protecting its value 'in places where the fiat currency is not particularly desirable because of issues like hyperinflation or government controls,' according to Henry Kim, a professor at York University in Canada.
The GENIUS Act, passed by Congress in mid-July, should ramp up a trend of using stablecoins for cross-border payments, said Stanford University finance professor Darrell Duffie.
Another use, already offered by several startups, is enabling companies to pay workers living abroad directly in stablecoin instead of dealing with local currencies and financial systems.
Online shops
Small merchants selling wares online can use stablecoin transactions to improve margins and pay less to credit or debit card networks, according to MIT cryptoeconomics lab researcher Christian Catalini.
Visa and Mastercard combined collected around US$187 billion (RM791 billion) in fees on card purchases in the US last year, according to the Merchant Payments Coalition.
Conducting sales in stablecoins bypasses banks or payment systems, reducing transaction costs.
E-commerce giants
Amazon, Walmart, China's JD.com and even travel platform Expedia are considering creating their own stablecoins.
This is a way for the online giants to lower fees and make customer loyalty programmes more enticing, said Catalini.
Having custom stablecoins would also allow the companies to offer financial services and, if widely adopted, could deprive banks of deposits they use for lending.
A broad shift to stablecoin would spare multinational companies from adverse effects exchange rates can have on earnings but raises questions about security.
The traditional financial system invests heavily in protecting customers from fraud and keeping people's accounts secure.
Business dealings
Stablecoins 'are likely to have far greater consequences' when it comes to business between companies, according to Kim.
Liu Qiangdong, founder of Chinese conglomerate JD.com, has spoken about how stablecoin could slash cross-border payment costs by 90% and completing transactions in seconds instead of days as is currently the case.
Kim says generative AI agents capable of independently handling computer tasks are well-suited to automatically tend to stablecoin transactions. – AFP
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
New Straits Times
3 hours ago
- New Straits Times
Trump's 'America First' may fuel global currency shift
EUROPE and Asia could leverage United States President Donald Trump's "America First" strategy for their own benefit, eventually spurring the development of regional tripolar foreign exchange (forex) blocs that could erode the dominance of the US dollar and reshape global markets. The US dollar has struggled this year, especially since Trump's April 2 tariff announcement. While the currency jumped recently following the announcement of US-European Union trade deal, this short-term move doesn't change the long-term trends that could undermine the greenback's position. Economic dominance in the future could largely depend on access to affordable, efficient energy to power artificial intelligence technologies. And in the race to dominate the industries of the future, the US is arguably going in reverse. It's retreating from the renewables space, as seen in the administration's recent move to eliminate many clean energy subsidies. The president appears to be making the bet that the US can maintain energy dominance indefinitely by relying on its own fossil fuel resources. This could ultimately result in uncompetitive power costs in the future, given that China is already dominating in clean energy technologies like solar and electric vehicles. While Trump may be seeking to enhance American self-sufficiency, the administration's policies may actually be increasing the country's dependency on foreign capital. Trump's recently passed budget bill — which looks pretty ugly to fiscal watchdogs despite its name — could cement the US' position as the world's biggest capital importer by adding an expected US$3.4 trillion to the US deficit over the next decade, according to estimates by the nonpartisan Congressional Budget Office, potentially locking in six to seven per cent budget deficits for years. The US has also been running current account deficits of roughly four per cent over the past several years, and this widened to six per cent of gross domestic product in the first quarter, according to the US Bureau of Economic Analysis. By spending beyond its means and running these twin deficits, the US will continue to require large amounts of foreign capital inflows. But this capital may soon be harder to come by, if Europe and Asia seek to keep more of it closer to home. While Europe has agreed to increase US energy purchases through the recently announced US trade deal, much of that agreement remains up in the air. Meanwhile, Asia has begun to trade more internally, as China has been focusing on export diversification. A growing regionalisation of supply chains began during the Covid-19 pandemic and appears to be accelerating as Trump seeks to drive production back to the US and all major global powers focus on securing regional raw material access (e.g., rare earths and other critical minerals) for national security purposes. This shift could eventually create the foundation for true regional forex blocs across Asia, Europe and the Americas. Within Asia, Pan Gongsheng, governor of the People's Bank of China, has recently highlighted China's interest in having the yuan play a larger role in a multi-polar currency world. While China's capital account remains closed, Asian currencies already primarily trade off the yuan rather than the US dollar. Even though China faces challenges, such as its fight against deflation, its efforts on this front — namely, boosting consumption and reining in excess supply, especially in the renewable energy space across solar, wind and batteries — could ultimately help attract more foreign capital by boosting China's growth profile and corporate earnings. In a world of currency blocs, Europe and Asia could emerge as potential winners, as they erode the US' position as the world's financial powerhouse. So while many investors may get lost in the short-term currency noise, it might be wise to instead focus on the long-term signal.
The Star
5 hours ago
- The Star
World economies reel from Trump's tariffs punch
ASIA/SOUTH-EAST ASIA (AFP): Global markets reeled at the weekend after President Donald Trump's tariffs barrage against nearly all US trading partners as governments looked down the barrel of a seven-day deadline before higher duties take effect. Trump announced late Thursday that dozens of economies, including the European Union, will face new tariff rates of between 10 and 41 per cent. However, implementation will be on August 7 rather than Friday as previously announced, the White House said. This gives governments a window to rush to strike deals with Washington setting more favorable conditions. Neighboring Canada, one of the biggest US trade partners, was hit with 35 percent levies, up from 25 percent, effective Friday -- but with wide-ranging, current exemptions remaining in place. The tariffs are a demonstration of raw economic power that Trump sees putting US exporters in a stronger position, while encouraging domestic manufacturing by keeping out foreign imports. But the muscular approach has raised fears of inflation and other economic fallout in the world's biggest economy. Stock markets in Hong Kong, London and New York slumped as they digested the turmoil, while weak US employment data added to worries. Trump's actions come as debate rages over how best to steer the US economy, with the Federal Reserve this week deciding to keep interest rates unchanged, despite massive political pressure from the White House to cut. Data Friday showed US job growth missing expectations for July, while unemployment ticked up to 4.2 percent from 4.1 percent. On Wall Street, the S&P 500 dropped 1.6 percent, while the Nasdaq tumbled 2.2 percent. - Political goals - Trump raised duties on around 70 economies, from a current 10 percent level imposed in April when he unleashed "reciprocal" tariffs citing unfair trade practices. The new, steeper levels listed in an executive order vary by trading partner. Any goods "transshipped" through other jurisdictions to avoid US duties would be hit with an additional 40 percent tariff, the order said. But Trump's duties also have a distinctly political flavor, with the president using separate tariffs to pressure Brazil to drop the trial of his far-right ally, former president Jair Bolsonaro. He also warned of trade consequences for Canada, which faces a different set of duties, after Prime Minister Mark Carney announced plans to recognize a Palestinian state at the UN General Assembly in September. In targeting Canada, the White House cited its failure to "cooperate in curbing the ongoing flood of fentanyl and other illicit drugs" -- although Canada is not a major source of illegal narcotics. By contrast, Trump gave more time to Mexico, delaying for 90 days a threat to increase its tariffs from 25 percent to 30 percent. But exemptions remain for a wide range of Canadian and Mexican goods entering the United States under an existing North American trade pact. Carney said his government was "disappointed" with the latest rates hike but noted that with exclusions the US average tariff on Canadian goods remains one of the lowest among US trading partners. - 'Tears up' rule book - With questions hanging over the effectiveness of bilateral trade deals struck -- including with the EU and Japan -- the outcome of Trump's overall plan remains uncertain. "No doubt about it -- the executive order and related agreements concluded over the past few months tears up the trade rule book that has governed international trade since World War II," said Wendy Cutler, senior vice president of the Asia Society Policy Institute. On Friday, Trump said he would consider distributing a tariff "dividend" to Americans. Notably excluded from Friday's drama was China, which is in the midst of negotiations with the United States. Washington and Beijing at one point brought tit-for-tat tariffs to triple-digit levels, but have agreed to temporarily lower these duties and are working to extend their truce. Those who managed to strike deals with Washington to avert steeper threatened levies included Vietnam, Japan, Indonesia, the Philippines, South Korea and the European Union. Among other tariff levels adjusted in Trump's latest order, Switzerland now faces a higher 39 per cent duty. - AFP
Malay Mail
6 hours ago
- Malay Mail
Biofuel battle: Why India is shielding its farmers in the face of US trade pressure
MUMBAI, Aug 3 — US President Donald Trump on Thursday slapped a 25 per cent tariff on Indian goods after prolonged talks that got bogged down over access to India's labour-intensive agricultural sector, which New Delhi has pledged to protect. Why is India opposing the products the US is lobbying for? The United States is pressing India to open its markets to a wide range of American products, including dairy, poultry, corn, soybeans, rice, wheat, ethanol, fruits and nuts. While India is willing to provide greater access for US dry fruits and apples, it is holding back on corn, soybeans, wheat, and dairy products. A key reason for this resistance is that most US corn and soybeans are genetically modified (GM), and India does not permit the import of GM food crops. GM crops are widely perceived in India as harmful to human health and the environment, and several groups affiliated with Prime Minister Narendra Modi's ruling Bharatiya Janata Party (BJP) are opposing their introduction. The commercial cultivation of a high-yielding GM mustard variety that India developed itself is currently not allowed due to an ongoing legal battle. Like GM crops, dairy is also a highly sensitive issue, as it provides a livelihood for millions of farmers, including many who are landless or smallholders. The dairy industry helps sustain farmers even during erratic monsoon seasons, which can cause significant fluctuations in crop production. In India, where a large proportion of the population is vegetarian, food choices are strongly influenced by cultural and dietary preferences. Indian consumers are particularly concerned that cattle in the US are often fed animal by-products — a practice that conflicts with Indian food habits. A farmer sprinkles fertiliser in a paddy field on the outskirts of Amritsar on July 5, 2025. — AFP pic Why are agricultural imports politically charged? India is self-sufficient in most farm goods, with the exception of vegetable oils. After liberalising cooking oil imports over three decades ago, the country now has to import nearly two-thirds of its supply to meet demand. India does not want to repeat this mistake with other basic foods, which account for nearly half of its consumer price index. Though agriculture makes up just 16 per cent of India's nearly US$3.9 trillion economy, it is the lifeblood for nearly half the country's 1.4 billion people. Four years ago, this powerful voting bloc forced Modi's government into a rare retreat on a set of controversial farm laws. Some in power fear a flood of cheaper US imports would bring down local prices and hand opposition parties an opportunity to sharpen its attack on the government. New Delhi is also worried that a trade deal with the US could also force it to open its agricultural sector to other countries. Farmers work in an onion farm near power-generating windmill turbines of Adani Green Energy at Ahmedabad-Narayan Sarovar state highway near Nakhatrana village in the western state of Gujarat November 29, 2024. — Reuters pic How does farming in India and the US differ? The vast disparity in the scale of farming makes it difficult for Indian farmers to compete with their US counterparts. The average Indian farm is 1.08 hectares, compared to 187 hectares in the US For dairy farmers, the difference is even more dramatic — a small herd of two or three animals versus hundreds or more in the US Many Indian farmers also rely on traditional, unmechanised techniques, while American agriculture has developed into a highly efficient, tech-driven industry. Why is India hesitant to use US ethanol in its biofuel programme? One of India's key goals with its Ethanol Blended Petrol (EBP) programme is to reduce energy imports and support domestic farmers by using sugarcane and corn for biofuel production. Indian companies have invested heavily in new distilleries, and farmers have expanded corn cultivation to meet the rising demand. India recently achieved its ambitious target of a 20 per cent ethanol blend in petrol. With state assembly elections approaching in Bihar — a major corn-producing state in the east — allowing US ethanol imports would lower local corn prices. This would probably anger farmers and turn them against the BJP ahead of the election and also undermine the growing distillery sector. — Reuters
