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3 Stablecoin Stocks Investors May Have Missed
Stablecoins are becoming increasingly important to the cryptocurrency industry
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There has been no shortage of headlines and debates surrounding cryptoassets recently, generating both positive and negative price momentum for the sector. As both the Mt. Gox and German government liquidations proceed in a seemingly orderly fashion, these actions have both put significant pressure on the price of bitcoin, which has briefly dropped below $58,000. That said, as these liquidations have continued, price support at these levels has held, indicating that even after an initial bout of fear from this mass sell-off, investors remain confident in the medium to long-term price outlook. J.P. Morganfor example, it predicts that liquidation and price pressure will end by the end of July, followed by a market rebound in August. Cryptocurrency forecasts are notoriously difficult to get right, but they serve as an example of market sentiment.
Additionally, cryptocurrencies continue to play an increasingly prominent role in political conversations, with the Biden administration holding a high-level meeting with crypto industry leaders and advocates in an effort to shore up support in what has emerged as an opportunity to sway undecided voters. Across the aisle, former President Trump announced a 30-minute presentation at Bitcoin 2024one of the largest and most significant cryptocurrency conferences in the United States. With all that is going on, it would be reasonable for investors and supporters to focus on these elements, but that would miss several important points.
Let’s take a look at some headlines and stories that cryptocurrency investors may have overlooked.
SEC continues to falter
While Binance and CZ have individually pleaded guilty to criminal activity, paid billions in fines, and face significant legal challenges going forward, the SEC has recently suffered a legal setback in further efforts related to Binance. The SEC recently concluded its investigation into Step – the issuer of the Binance USD stablecoin – without recommending any enforcement action. The lack of enforcement action in itself should definitely be seen as celebratory news from Paxos, but it could also have broader implications for cryptocurrency regulation.
As the SEC continues to face growing resistance and legal challenges to its ongoing efforts to classify the entire cryptocurrency sector as securities, stablecoins are positioned to benefit. Especially since these cryptocurrencies, nearly all backed 1:1 by the USD, were created specifically and intended to be used as a medium of exchange rather than an investment vehicle, these setbacks could provide some much-needed breathing room for more objective conversations on the issue.
PayPal’s Stablecoin Continues to Grow
After a fairly low-profile launch, almost immediately hindered by an SEC investigation into the stablecoin itself, PayPal’s stablecoin efforts have continued. A recent integration with the Solana blockchain has led to a surge in the token’s market cap, which recently surpassed 500 million dollarsDeFillama data shows that the total supply on the existing Ethereum blockchain is around $399 million, or 77% of the total supply with the remainder on Solana. Furthermore, supply has increased rapidly, by 58% during the first week of integration, on Solana, while it has fallen by 6% on Ethereum.
Additionally, the Solana integration has also led to substantial growth on DeFi platforms and in the DeFi ecosystem at large, with availability on both Jupiter and Orca DEX, as well as inclusion in the Kamino Finance lending and liquidity protocol. Given the household name recognition that PYUSD has, coupled with the growth that has come from the Solana integration, it appears that PayPal and PYUSD appear to be positioned for continued growth and usage.
State-backed stablecoins are coming fast
While the federal government continues to lurch back and forth on cryptocurrency regulation and standard-setting, individual states continue to lead the way. Building on previous efforts, the state of Wyoming has announced plans to launch a state-backed stablecoin in 2022. After facing some resistance and legislative difficulties, an announcement was made in May 2024 that minting of the state-backed token was underway. The token, which is backed on a 1:1 basis by the US dollar, is expected to begin circulation later in 2024 and will be issued under the ticker WYST.
The commission was empowered by the passage of Senate Enrolled Act 85: Wyoming Stable Token Act, which granted the Stablecoin Commission the power to issue the first state-backed stablecoin in the United States. WYST is set to debut and be hosted on the Ethereum blockchain and will only be traded/available on centralized exchanges like Coinbase. While it is too early to tell how successful or widespread WYST will be, the fact that a single state has been able to get this far so quickly speaks to how strong the appeal of stablecoins remains.
Stablecoins are here to stay, playing a critical role for TradFi, centralized exchanges, DEXs, and investors of all sizes looking to invest capital in cryptocurrencies. Even with multiple headlines in the media, investors and advocates should not lose sight of this critically important cryptocurrency class.