Stablecoins drive demand for government bonds and are fundamental to the US economy – Cantor Fitzgerald, CEO

(Kitco News) – Following the launch of several Bitcoin (BTC) spot exchange-traded funds (ETFs) in the U.S., financial institutions have slowly become more open to the idea of ​​dabbling in digital assets, with some recognizing that the underlying blockchain Technology will play a crucial role in financial markets in the future.

One of the most recent CEOs to highlight the benefits of cryptocurrencies is Howard Lutnick, CEO of Cantor Fitzgerald LP, a global financial services company founded in 1945.

According to Lutnick, who spoke at the Chainalysis conference in New York on Wednesday, stablecoins offer numerous benefits to the U.S. economy and the tokenization of financial assets is likely to increase in the future.

“Dollar hegemony is fundamental to the United States of America. It’s important for us, for our economy,” Lutnick said, according to a report by Bloomberg. “That’s why I’m a fan of properly collateralized stablecoins. I am a fan of Tether. I’m a fan of Circle.”

Cantor currently serves as custodian for Tether Holdings Ltd., the company responsible for issuing Tether (USDT), the largest stablecoin by market capitalization. Lutnick has previously confirmed that Tether does indeed have the money it claims it does, defying years of speculation from crypto advocates that USDT is unbacked.

Despite the warnings of many on Capitol Hill, Lutnick said stablecoins like USDT do not pose a systemic risk to the world. Instead, he said they help spur demand for U.S. Treasury bonds and are therefore “fundamental to the U.S. economy.”

“It’s just an evolution,” he said. “It's better and it's everywhere. And thank God.”

Lutnick said the real danger comes from central bank digital currencies (CBDCs), which would give the government unprecedented opportunities to spy on the purchases of everyday Americans.

“My fear is that central banks would like to issue a central bank digital currency. “That makes sense, right?” he said. “But the problem is, what will China think? They will define it as an American spy wallet.”

He also expects the movement to tokenize real-world assets (RWA) to gain momentum in the coming years, predicting a time when assets such as bonds will be traded primarily on blockchains.

“I think when real blockchains – I mean blockchains that are fast and cheap – become available – I think there will be fundamental tokenization of financial assets in the next 10 years,” Lutnick said.

He also highlighted the growing interest of financial giants such as BlackRock, Brevan Howard and KKR in tokenizing various parts of funds, noting that Citigroup estimates that the tokenization market will reach $5 trillion by 2030, which further underscores the potential magnitude of this evolving trend.

According to Tether CEO Paolo Ardoino, the tokenization trend will only grow from here and “there will always be a place for the dollar on the blockchain.”

“The stability and widespread acceptance of the dollar make it a natural fit for blockchain-based transactions, ensuring seamless integration into existing financial systems and facilitating global trade and commerce,” he said in an interview with Kitco Crypto. “Furthermore, its reserve currency status and support from trusted institutions ensure trust and familiarity in an increasingly digitalized financial landscape, strengthening the dollar’s ​​enduring role in the blockchain.”

“Tokenization of real-world assets such as real estate, stocks, commodities, and even intellectual property rights can unlock liquidity, reduce trading friction, and enable fractional ownership, opening up new investment opportunities and democratizing access to assets traditionally reserved for institutional investors.” , Ardoino noted. “In addition, tokenization of RWAs can improve transparency, streamline processes such as settlement and transfer of ownership, and reduce counterparty risk.”

He suggested that as the infrastructure and regulatory framework for tokenization of RWAs matures, “these new applications are likely to play an increasingly important role in shaping the future of tokenization, complementing stablecoins and leveraging the utility and versatility of blockchain.” -based assets.” ”

On Thursday, USDC issuer Circle announced new smart contract functionality that would allow holders of the BlackRock USD Institutional Digital Liquidity Fund (BUIDL) to transfer their shares to Circle for USDC.

“Circle’s groundbreaking smart contract functionality enables the seamless transfer of BUIDL shares for USDC to Circle on the secondary market,” Circle said in a press release. “USDC provides a trusted and transparent method for users who want to sell their BUIDL shares but still hold digital dollars.”

Reacting to the announcement, crypto investor Ryan Sean Adams said: “Stablecoins are launching in the US because BlackRock and the banks want them to.” That couldn’t be more obvious.”

“The new BlackRock BUIDL fund on Ethereum is a high-bandwidth pipeline between US Treasuries and USDC. Pipelines will bring trillions into the chain,” he said. “USDC issuer Circle will (likely) go public soon. BlackRock owns Circle.”

“Banks will get involved in stablecoins – by acquiring, partnering with, or controlling crypto-native companies – and they will advocate for and implement stablecoin legislation along the way,” Adams predicted. “The US does not have the political will to build a central bank digital currency. They are [creating] a de facto through stablecoins issued by private banks on public crypto networks such as Ethereum.”

“As long as we keep open, permissionless, decentralized protocols like Ethereum at the bottom of the stack, then crypto wins,” Adams concluded. “The resulting liquidity and legitimacy will make crypto unstoppable.”

Several recent headlines highlight the growing popularity of stablecoins as a route to blockchain adoption.

Last Thursday, XRP issuer Ripple announced plans to launch a stablecoin pegged 1:1 to the US dollar, and PayPal announced that Xoom, the company's cross-border money transfer service, will now allow US users to transfer money to friends and family abroad using USD converted from PayPal's stablecoin PayPal USD (PYUSD).

On Friday, Sony Bank announced that the gaming giant has launched a proof-of-concept (PoC) pilot to explore the potential benefits of stablecoins pegged to fiat currencies, including reduced payment and transfer fees and opportunities to explore introducing these into Sony's gaming and gaming intellectual property in sports.

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