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If the Federal Reserve lowers the returns on regular financial products this year, institutions might find DeFi (Decentralized Finance) products attractive. This means they could be tempted to explore and invest in DeFi as an alternative.<img src="https://i0.wp.com/cryptosheadlines.com/wp-content/uploads/2024/01/Add-a-heading-1.png?fit&#61;900%2C300&amp;ssl&#61;1" />CryptosHeadlines Platform Has Launched its Native token <a href="https://cryptosheadlinestoken.com/" rel="noopener noreferrer nofollow">Get Waitlisted Now</a>Fidelity, an asset manager, suggests that if the Federal Reserve in the United States lowers interest rates as expected, big institutions might become more interested in decentralized finance (DeFi) and stablecoins. However, Fidelity notes that this depends on the improvement of the infrastructure supporting these technologies throughout the year.<h3 id="fidelity-s-2024-outlook-on-digital-assets-and-defi-adoption">Fidelity’s 2024 Outlook on Digital Assets and DeFi Adoption</h3>In its recently released “2024 Digital Assets Look Ahead” report on January 13, Fidelity shared insights about the potential for institutional engagement in decentralized finance (DeFi). Contrary to expectations last year, institutions didn’t explore DeFi for yields due to Federal Reserve rate hikes. Instead, they opted for traditional fixed-income products perceived as safer.<a href="https://cryptosheadlines.com/defi-platform-shuts-down-urges-users-to-withdraw-funds-in-1-month/" rel="noopener noreferrer nofollow">DeFi platforms faced challenges with user</a> interfaces and concerns about vulnerabilities to hacks and exploits, making institutions cautious about the associated risks with smart contracts. In the risk-averse environment, institutions considered the mid-single digit returns from DeFi yields too low for the experimentation with <a href="https://cryptosheadlines.com/european-blockchain-sector-fights-against-rules-impacting-smart-contracts/" rel="noopener noreferrer nofollow">smart contracts</a>.However, Fidelity anticipates a possible shift in 2024. If <a href="https://cryptosheadlines.com/binance-labs-and-pendle-finance-partner-to-transform-defi-yields/" rel="noopener noreferrer nofollow">DeFi yields</a> become more attractive than traditional financial (TradFi) yields and the infrastructure supporting DeFi further develops, institutions may show renewed interest.Fidelity also predicts that corporations might become more comfortable incorporating <a href="https://cryptosheadlines.com/sec-drops-proposed-digital-assets-definition-from-final-hedge-fund-rules/" rel="noopener noreferrer nofollow">digital assets</a> into their balance sheets, especially with updated rules from the United States Financial Accounting Standards Board (FASB) allowing companies to report both paper losses and gains from their crypto holdings.<h3 id="fidelity-s-insights-on-stablecoins-and-2024-adoption-prospects">Fidelity’s Insights on Stablecoins and 2024 Adoption Prospects</h3>In a dedicated section on stablecoins, Fidelity foresees <a href="https://cryptosheadlines.com/bitcoin-etfs-to-drive-institutional-adoption-in-2024-mike-novogratz/" rel="noopener noreferrer nofollow">institutional exploration as the primary catalyst for the adoption</a> of dollar-pegged assets this year. Fidelity suggests that if traditional financial (TradFi) firms start using <a href="https://cryptosheadlines.com/visa-and-solana-partner-for-efficient-stablecoin-settlements/" rel="noopener noreferrer nofollow">stablecoins for activities like settlements</a>, it could lend credibility to these assets.<a href="https://cryptosheadlines.com/spot-bitcoin-etf-launch-blackrock-ark-21shares-join/" rel="noopener noreferrer nofollow">Also Read: Spot Bitcoin ETF Launch: BlackRock &amp; Ark 21Shares Join</a>The company anticipates that the three main sectors to witness increased stablecoin adoption will be payments, remittances, and international trade, driven by users seeking faster and more cost-effective <a href="https://cryptosheadlines.com/shiba-inu-surges-as-top-payment-method-on-coingate/" rel="noopener noreferrer nofollow">payment methods</a>.Fidelity also expresses optimism about <a href="https://cryptosheadlines.com/european-commission-plans-to-unveil-digital-euro-regulatory-framework-in-june/" rel="noopener noreferrer nofollow">regulatory frameworks</a> becoming clearer, offering more certainty to the stablecoin market. The report predicts that stablecoins like Tether (USDT) and <a href="https://cryptosheadlines.com/advocates-push-for-hong-kong-government-stablecoin-to-rival-tether-and-usd-coin/" rel="noopener noreferrer nofollow">USD Coin</a> (USDC) maintaining their $1.00 peg won’t face challenges in 2024.Fidelity concludes that this market segment is expected to gain more traction throughout the year, potentially even more so if the anticipated Federal Reserve <a href="https://cryptosheadlines.com/us-fed-chair-powell-interest-rates-may-stay-low/" rel="noopener noreferrer nofollow">interest rate</a> cuts materialize.Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.Join Cryptos Headlines <a href="https://linktr.ee/cryptosheadlines.com" rel="noopener noreferrer nofollow">Community</a>Follow Cryptos Headlines on <a href="https://news.google.com/publications/CAAqBwgKMLz3-wowvuzoAg" rel="noopener noreferrer nofollow">Google News</a>

Fidelity Says Lower Fed Interest Rates Could Benefit DeFi and Stablecoins

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