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20 sats \ 6 replies \ @grayruby OP 6 Jun \ parent \ on: Circle is wildly overvalued Stacker_Stocks

Why won't the banks create their own stablecoins? You are assuming all that market share goes to USDC. You don't think there will be other issuers. There is no moat to spinning up a token and buying treasuries with the USD you take in.

Also a 5x would increase earnings from 500M (assumed) to 2.5B which would be 10x earnings not 2x.

55 sats \ 3 replies \ @freetx 6 Jun

Also a 5x would increase earnings from 500M (assumed) to 2.5B which would be 10x earnings not 2x.

You're right. Still in a collapsing fiat system a PE of 25 is considered "normal".

Why won't the banks create their own stablecoins?

I'm sure some will try. The funny thing though is are traditional banks capitalized enough? They cant simply print money, they need actual funds to buy 1:1 Treasuries to back their virtual USD.

The most curious thing (and least talked about, IMO) about GENIUS act is we are moving back to full reserve banking.

I suspect the next shoe to drop is that Tether and USDC will compete for clients by giving them a share of their interest earnings (assuming they are earning ~4.5% on their treasuries).

Therefore, I think the way the game will shape up is USDC or Tether will sign "exclusives" with large retail banks and offer them say 2% for the customers they onboard. The retail banks, being broke, will go for the easy-no-work-free cash.....

The retail banks are basically turning into front-end websites and Tether/USDC will be the actual banks.

25 sats \ 2 replies \ @grayruby OP 6 Jun

If they start to offer users a share in the yield it becomes a race to zero like brokerage fees and the entire business model becomes about AUM not profit. If they need volume to 5x now they definitely need it to 10x or more if they are sharing the yield. The more treasuries they hold the more risk. They are short term but even small changes in price at such a large market cap could put them at risk of the peg breaking.

55 sats \ 1 reply \ @freetx 6 Jun

I'm actually surprised USDT hasn't started to domicile to the US yet and/or get listed as a public company.

Supposedly Cantor is their bank....so all their funds are already held by US custodian...so it should be pretty straight forward for them to at least create a Tether LLC somewhere and become a domestic company.

10 sats \ 0 replies \ @grayruby OP 6 Jun

I am sure they will have a US division at some point.

20 sats \ 1 reply \ @optimism 6 Jun

Why won't the banks create their own stablecoins?

Risky and outside of core business. They don't have the expertise. It's cheaper and easier to control liabilities when you just take a stake in Circle stock and contract them to do it for ya.

15 sats \ 0 replies \ @grayruby OP 6 Jun

They could have bought Circle outright if they wanted but now that it is public and massively overvalued it makes more sense to cannibalize their business.