Big banks rush into stablecoins

Major banks and fintech firms are entering the stablecoin space, aiming to carve out a share of the growing cross-border payments market, long dominated by crypto firms like Tether and Circle, the Financial Times reports. Institutions including Bank of America, Standard Chartered, PayPal, Revolut, and Stripe are moving into the sector as regulatory frameworks take shape and transaction volumes rise.

The market is heating up fast: Stablecoin transactions hit USD 710 bn last month, up from USD 521 bn a year prior. The number of unique stablecoin wallets also grew 50% to 35 mn, according to Visa data. Companies are also finding practical use cases — SpaceX, for example, uses stablecoins to move Starlink revenues from Argentina and Nigeria, while AI firm ScaleAI pays international contractors in digital tokens.

More developments are underway: Stripe dropped USD 1.1 bn to acquire stablecoin startup Bridge, and PayPal is planning to expand its PYUSD rollout this year. Meanwhile, the EU has implemented compliance regulations for stablecoins, while the UK is gearing up for its own regulations, and US politicians are discussing stablecoin-related bills. Bank of America CEO Brian Moynihan acknowledged the shifting landscape, saying, “If they make that legal, we will go into that business.”

Regulations are taking shape here at home too: The Financial Services Regulatory Authority issued a regulatory framework for the issuance of stablecoins in the ADGM last year, after which the Central Bank of the UAE granted final approval for the launch of AE Coin, making it the country’s first AED-pegged stablecoin.

EMs could become leaders in this space: The real momentum for stablecoins is in emerging markets, where currency risk and weak banking infrastructure make them a preferred option for commodities, agriculture, and shipping. In Western markets, however, their role is “not as obvious,” Index Ventures’s Martin Mignot said.

Stablecoins still carry risks: Analysts warn that stablecoins function as digital IOUs rather than true cash, meaning users are exposed to the financial health of the issuing company. “Essentially what the brand of the stablecoin tells you is that this is who the issuer is,” fintech consultant Simon Taylor said. “Therefore, because the issuer is that organisation, your credit risk is X or Y. That’s not something you do with the USD.”

MARKETS THIS MORNING-

Asian markets broke away from the losing streak on Wall Street, with most markets up in trading as of dispatch. South Korea’s Kospi and Japan’s Topix were both up, while the Nikkei was flat in early trade. On Wall Street, futures are pointing to a stronger open after another volatile day in trading as the Trump administration’s whispering trade policy continued to breed uncertainty among investors.

THE CLOSING BELL: TADAWUL-

The TASI fell 0.2% yesterday on turnover of SAR 7.7 bn. The index is down 2.7% YTD.

In the green: Riyadh Cables (+10.0%), Batic (+6.3%) and AlBaha (+5.9%).

In the red: AlArabia (-5.1%), Al Mawarid (-4.5%) and Bawan (-3.8%).

THE CLOSING BELL: NOMU-

The NomuC fell 0.9% yesterday on turnover of SAR 39.2 mn. The index is down 2.3% YTD.

In the green: TMC (+6.5%), Rawasi (+5.9%) and Keir (+5.6%).

In the red: AlJouf Water (-9.5%), AlRasheed (-9.0%) and Fad (-8.4%).

CORPORATE ACTIONS-

Naba Alsaha’s shareholders approved an upstream merger with Al Anwar Medical Company, a fully-owned subsidiary, authorizing its board to begin financial and regulatory processes for the transaction, it said in a disclosure to Tadawul. The merger will not affect Naba’s capital.

Al Modawat tapped Al Rajhi Capital as a market maker for its shares, it said in a disclosureto Tadawul. This is still subject to regulatory approvals, with the appointment set to run for 12 months from when the agreement is finalized.

Twareat Medical Care Company’s board recommended distributing SAR 10 mn in dividends for FY 2024 at SAR 0.25 per share, according to a disclosure to Tadawul. Payments will be made in five equal installments, with dates set to be announced later.