Citi Wealth doesn’t see stablecoins as threat

A recent report published by the financial company states that stablecoins can help “reinforce the U.S. currency’s longstanding global dominance.” Citi Wealth analysts point out that about 80% of these assets are pegged to USD.

According to the report, the trading volume of stablecoins pegged to the U.S. dollar challenges the popular view of BTC as a potential threat to fiat money.

“Originally, cryptocurrencies such as bitcoin were conceived as rivals to central bank–issued currencies. Indeed, some believed — and continue to believe — that bitcoin might end the U.S. dollar’s hegemony,” the analysts wrote.

Citi further explains that most stablecoins are USD-denominated, while their issuers keep reserves of U.S. currency, U.S. Treasury bills, and funds.

The experts suggest that the state government can eventually venture upon legitimizing stablecoins, which can bolster USD’s dominance.

Moreover, Citi analysts consider it necessary to create a regulatory framework for cryptocurrencies in the USA. It will make stablecoins more appealing as an investment asset and, consequently, drive stablecoin issuers to purchase more U.S. Treasuries.