Donald Trump

President Donald Trump

Stablecoins issued by traditional financial institutions may face challenges in gaining significant market adoption, according to Matt Hougan, chief investment officer at Bitwise.
“TradFi stablecoins will find it harder than they think to win market share,” Hougan <a href="https://x.com/Matt_Hougan/status/1894773763423527247" rel="noopener noreferrer nofollow" target="null">said</a> in an X post on Feb. 26.
Hougan referred to the newly announced <a href="https://cointelegraph.com/learn/articles/stablecoins-101-what-are-crypto-stablecoins-and-how-do-they-work" rel="noopener noreferrer nofollow" target="null">stablecoin</a> plans by Bank of America (BofA) CEO Brian Moynihan, who on Feb. 25 said BofA would likely <a href="https://cointelegraph.com/news/bank-america-ceo-enter-stablecoin-business" rel="noopener noreferrer nofollow" target="null">launch a US dollar-pegged stablecoin</a> once regulators came up with relevant legislation.
<figure><img alt="TradFi stablecoins will find it hard to win market share — Bitwise CIO" src="https://s3.cointelegraph.com/uploads/2025-02/01954667-c603-7794-acf3-cd187e997876" title="">
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 Source: Matt Hougan
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The news came shortly after Jeremy Allaire, co-founder of Circle — issuer of the second-largest stablecoin, USDC (<a href="https://cointelegraph.com/usdc-price-index" rel="noopener noreferrer nofollow" target="null">USDC</a>) — argued that all <a href="https://cointelegraph.com/news/stablecoin-firms-registered-us-circle-jeremy-allaire" rel="noopener noreferrer nofollow" target="null">USD stablecoin issuers should be registered</a> in the US.
<h2 id="stablecoins-as-new-cbdcs">Stablecoins as new CBDCs?</h2>
The BofA stablecoin news triggered mixed reactions from the community, with many seeing the news as a good sign for crypto adoption, while others viewed bank-issued stablecoins as a new version of <a href="https://cointelegraph.com/learn/articles/what-are-cbdcs-a-beginners-guide-to-central-bank-digital-currencies" rel="noopener noreferrer nofollow" target="null">central bank digital currencies</a> (CBDC).
“So are they going to just ‘rebrand’ CBDC's and just call them ‘stablecoins’?” one commentator <a href="https://x.com/Wallstreet_Gord/status/1894764977157783849" rel="noopener noreferrer nofollow" target="null">wrote</a> on X.
“Sounds CBDCish,” another industry observer <a href="https://x.com/Kurt_Kokain/status/1894780949793013969" rel="noopener noreferrer nofollow" target="null">said</a>.
Other community members disagreed, highlighting fundamental differences between a potential BofA-issued stablecoin and a CBDC.
“There’s a fundamental difference. A CBDC is a direct liability of the central bank while a stablecoin is a liability of the issuer. This has huge consequences,” digital asset researcher Anderson <a href="https://x.com/X__Anderson/status/1894801107857166425" rel="noopener noreferrer nofollow" target="null">wrote</a>.
<figure><img src="https://s3.cointelegraph.com/uploads/2025-02/01954667-ca5a-7bf0-94f4-594c444c433d" title="" alt="TradFi stablecoins will find it hard to win market share — Bitwise CIO">
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 An excerpt from the “Strengthening American leadership in digital financial technology” EO. Source: White House
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Community concerns over the US CBDC “rebrand” to centralized US dollar-pegged stablecoins may align with the new US strategy of boosting the US dollar with the help of stablecoins.
On Jan. 23, US President Donald Trump signed an executive order that <a href="https://cointelegraph.com/news/trumps-executive-order-eu-concerns-usd-stablecoin-dominance" rel="noopener noreferrer nofollow" target="null">pledged to promote the US dollar’s sovereignty</a>, “including through actions to promote the development and growth of lawful and legitimate dollar-backed stablecoins worldwide.” On the other hand, the order <a href="https://cointelegraph.com/news/trump-signs-executive-order-working-group-crypto" rel="noopener noreferrer nofollow" target="null">banned the development of CBDCs</a> in the US.
<h2 id="the-community-is-worried-that-tether-will-be-outlawed">The community is worried that Tether will be outlawed</h2>
Amid the BofA news, some in the community expressed concerns over potential implications for Tether, which issues the eponymous USDt (<a href="https://cointelegraph.com/tether-price-index" rel="noopener noreferrer nofollow" target="null">USDT</a>) stablecoin, the largest stablecoin by market capitalization.
“So Tether will likely be outlawed or treated differently compared to other US stablecoins. They are lobbying for this,” one commentator <a href="https://x.com/thecinematarian/status/1894759811268399519" rel="noopener noreferrer nofollow" target="null">wrote</a>.
Related: <a href="https://cointelegraph.com/news/paolo-ardoino-competitors-politicians-kill-tether" rel="noopener noreferrer nofollow" target="null">Paolo Ardoino: Competitors and politicians intend to ‘kill Tether’</a>
Tether CEO Paolo Ardoino took to X on Feb. 26 to describe the <a href="https://cointelegraph.com/news/us-stablecoin-bill-regulation-dollar-dominance" rel="noopener noreferrer nofollow" target="null">new legal stablecoin developments in the US</a> as “very troubling,” referring to a tweet by Rumble founder and CEO Chris Pavlovski.
<figure><img src="https://s3.cointelegraph.com/uploads/2025-02/01954667-cd37-7a2e-b8ac-83bc790c8af8" title="" alt="TradFi stablecoins will find it hard to win market share — Bitwise CIO">
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 Source: Tether CEO <a href="https://x.com/paoloardoino/status/1894785467146465367" rel="noopener noreferrer nofollow" target="null">Paolo Ardoino</a>
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“I’m getting a strong feeling that this toxic stablecoin legislation is negatively impacting Bitcoin price and hurting confidence in crypto,” Pavlovski wrote. He also suggested that the draft legislation is “designed to kill competition in the stablecoin market.”
Ardoino previously told Cointelegraph that <a href="https://cointelegraph.com/news/tether-usdt-best-friend-united-states-ceo" rel="noopener noreferrer nofollow" target="null">Tether encourages competition</a> in the stablecoin market but doesn’t aim to compete with stablecoin issuers in the US and Europe.
“Our focus has to be where we are needed the most,” he said, adding that Tether’s biggest demand comes from developing countries like Argentina, Turkey and Vietnam.
Magazine: <a href="https://cointelegraph.com/magazine/illicit-marketplace-stablecoin-sony-memecoin-asia-express/" rel="noopener noreferrer nofollow" target="null">Stablecoin for cyber-scammers launches, Sony L2 drama: Asia Express</a>

TradFi stablecoins will find it hard to win market share — Bitwise CIO

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