Banks are facing a big decrease in their profits from foreign exchange and interest rates trading, while stablecoins are becoming more popular for cross-border transactions. Global banks are expected to have the lowest income from these services since before the pandemic, with a 17% drop from last year and a 98% decline in FX trading desks, according to Matthew Sigel, Head of Digital Assets Research at VanEck.
Meanwhile, stablecoins had a market value of $188 billion by November 2024, with Tether (USDT) and USD Coin (USDC) making up most of it. Monthly stablecoin transactions averaged $425 billion in 2024, showing increasing use beyond digital asset trading. A survey found that 69% of people in emerging markets use stablecoins to replace their local currency, and 39% use them for cross-border payments.
Sigel pointed out, “Global banks are expected to earn the least from FX and interest rates trading since before the pandemic,” emphasizing the effect of tighter profit margins and improvements in electronic trading. In a thread, he agreed with LondonCryptoClub that it’s “crazy to think of any bank not setting up a crypto desk,” stressing the need for change in the banking sector.
The difference between falling traditional FX profits and the steady growth of stablecoins shows a shift in the financial world. As stablecoins offer faster and more accessible cross-border transactions, banks may need to include digital assets in their services to stay competitive.
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<p>The post Revenue Crunch: Stablecoins Threaten Banks’ Foreign Exchange first appeared on CoinBuzzFeed.</p>
