Finadium: Stablecoins, Capital Markets and the Fiat/Digital Currency Divide

A new Finadium report explores stablecoins, an exciting new product to enter financial markets. They are a potential bridge between the digital and fiat currency worlds that could end up providing payment systems and financial services with a new roadmap for gross settlement practices.

This report evaluates the model of stablecoins backed on a one to one ratio with government currency; one stablecoin in issuance must be backed by one dollar, euro or yen in a custodial account. These products are betting that trust, built on transparency and regulation, will bring users.

To capital markets, these products look similar to ETFs and ADRs, built as they are on collateral assets. Instead of a management fee however, issuers earn returns by reinvesting the cash holdings in safe assets, including overnight repo, US Treasuries and money market funds. At a modest 2.5% annual return, a relatively successful stablecoin could become a healthy cash generator for the issuing firm.

This report has been written for capital markets participants to understand stablecoins and their potential role in core settlements activity. Stablecoin issuers and service providers may also benefit from understanding how their products could grow to become a mainstream part of the $700 billion in annual revenues generated by the capital markets industry.

Finadium subscribers to our Fintech Capital Markets series can log in here to access this report.

A direct link to the report is

For non-subscribers, more information is available here.

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