The cryptocurrency market, which recently experienced record highs, is now under significant pressure. Bitcoin has dropped in price, with other popular coins following suit.
Wall Street Raises Alarm
The recent global sell-off in the cryptocurrency market has reduced its value to approximately $3.88 trillion. Wall Street is expressing concerns over the newly passed Genius Act targeting stablecoins, which poses up to $6.6 trillion liquidity risks. Major banks like JPMorgan and Bank of America are urging Congress to address loopholes in the law.
Banks' Concerns
For banks, deposits are the lifeline used to provide loans. A massive shift towards stablecoins could reduce credit availability and increase borrowing costs. The U.S. Treasury previously warned that the stablecoin market could grow beyond $2 trillion by 2028, reshaping the financial system.
Growing Demand for Stablecoins
The demand for stablecoins is rising, with increased competition not only from cryptocurrency-native firms but also from major fintech companies and tech giants. The Japan Financial Services Agency has also indicated it may approve its first yen-based stablecoin soon.
The situation in the cryptocurrency market remains volatile due to regulatory changes and growing competition in the stablecoin segment, which may significantly impact traditional financial institutions.
