Banks Facing Decline in FX Trading Revenue, Stablecoins on the Rise
Global banks are experiencing a significant decline in foreign exchange (FX) and rates trading revenue, with projections showing a 17% year-on-year slump and a 98% decline specifically in FX desks, according to Head of Digital Assets Research at VanEck, Matthew Sigel.
Stablecoins Gaining Traction
Meanwhile, stablecoins are gaining traction as an alternative for cross-border transactions. As of November 2024, stablecoins had a market capitalization of $188 billion, with Tether (USDT) and USD Coin (USDC) leading the way. Monthly stablecoin transactions averaged $425 billion in 2024, indicating growing adoption beyond digital asset trading.
- 69% of respondents in emerging markets use stablecoins for currency substitution
- 39% use stablecoins for cross-border payments
Adapting to Changing Landscape
Matthew Sigel highlighted the need for banks to adapt to the changing landscape, noting that global banks are reporting their lowest revenue from FX and rates trading since before the pandemic. The contrast between declining traditional FX revenues and the steady growth of stablecoins underscores the need for banks to integrate digital assets into their services to remain competitive.
Insights from Analyst Liam ‘Akiba’ Wright
Liam ‘Akiba’ Wright, Editor-in-Chief at CryptoSlate, emphasizes the potential for decentralized technology to drive positive change in the financial sector. He believes that banks should consider building out crypto desks to stay relevant in a rapidly evolving industry.
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