By Michael Scott
Chronicle Labs founder Niklas Kunkel offers a bold outlook on the US federal framework, inspiring countless entries into the stablecoin market.
The industry expert hails the push by US lawmakers for stablecoin-specific legislation in the country. Its enactment could usher in fierce competition for Tether (USDT) and USD Coin (USDC) from Meta and Uber.
Stablecoin Law a Necessity
The prediction by Kunkel emerges after Senate Banking committee chair Tim Scott revealed at the onset of February that the President Donald Trump will within 100 days sign the stablecoin bill into law. The Republican politician from South Carolina considers the GENIUS Act is timely and expects bipartisan support to pass the bill.
The founder of the blockchain oracle developer considers that as the bill gains momentum the industry would encounter a crossroads scenario. While the current measure seeks to bring the legality that stablecoins giants Circle and Tether sought, it could unleash heightened competition.
Kunkel indicates that the existence of a federal framework could entice many firms to pursue the $233 billion market.
Kunkel considers that other tech-based firms could explore the strategic advantages in stablecoins. Additionally, the $13 billion net profit realized by the USDT issuer in last year is an eye popping figure for other firms.
Fierce Competition in Stablecoin Inevitable
Kunkel considers the legislation enactment will attract over 10,000 companies. The Chronicle Labs founder considers the possible entrants exceeds beyond the asset issuers and payment companies. The list could feature tech titans including Google, Meta, Uber and Amazon.
Kunkel places a huge bet on 1,000 interested firms likely to debut a stablecoin within a year of passing the legislation. Rather than adopt the existing stablecoin, the firms will likely be incentivized to issue their own equivalent.
Kunkel adds that the firms will urge users to embrace their own branded stablecoin as they would earn yield on the underlying reserves. Such may attract the white labeled projects.
Kunkel outlined a white-labelled initiative citing Paxos that once issued the Binance-branded stablecoin (BUSD). He revealed the key role that Paxos had in the issuance of PayPal USD (PYUSD).
With digital assets already pegged to the fiat currency, dollar-backed stablecoins have cash and US Treasuries reserves that generate yield. This is evident in Coinbase disclosure of $244 million earned from the assets that back USDC.
Law to Expedite Stablecoins Adoption
A recent publication by S&P Global Ratings revealed the GENIUS Act would scale the stablecoins adoption. The report illustrates that absence of regulation poses the primary impediments to broader stablecoin adoption.
The S&P Global Ratings report echoes the letter by Paxos chief executive Charles Cascarilla days before the November elections. The letter urged the presidential candidates to prioritize the US into cementing its financial dominance via stablecoins that were overly stifled by regulatory overreach.
While firms such as BlakcRock are leading in tokenizing money market funds that mirror stablecoins, the S&P analysts consider absence of regulation and supervision hinders the broader adoption of stablecoins in the everyday payments.
The optimism by Kunkel aligns with the involvement of Chronical Labs to develop oracles network. The initiative will facilitate the blockchains toward connecting with the real-world data sources.
Prior to his role in the Switzerland-based firm, Kunkel had a five-year stinct within MakerDAO that is a lending protocol issuing stablecoin DAI rebranded to USDS.
Kunkel urges the regulatory backdrop to catch up. He decried past effects of Representative Maxine Waters from California when PayPal introduced the stablecoin in 2023. The top Democrat lamented that PayPalUSD debut before the government passed a framework on stablecoins operations.
The S&P considers the stablecoin legislation will intertwine the US financial system with the decentraized finance (DeFi) decentralized finance. However, the stablecoins role will evolve toward TradFi and DeFi integration.