{"id":9309,"date":"2025-08-30T07:53:03","date_gmt":"2025-08-30T07:53:03","guid":{"rendered":"https:\/\/bitunikey.com\/news\/stablecoins-vs-banks-a-fairer-test-of-what-makes-good-money-opinion\/"},"modified":"2025-08-30T07:53:07","modified_gmt":"2025-08-30T07:53:07","slug":"stablecoins-vs-banks-a-fairer-test-of-what-makes-good-money-opinion","status":"publish","type":"post","link":"https:\/\/bitunikey.com\/news\/stablecoins-vs-banks-a-fairer-test-of-what-makes-good-money-opinion\/","title":{"rendered":"Stablecoins vs. banks: A fairer test of what makes good money | Opinion"},"content":{"rendered":"<div class=\"post-detail__content blocks\">\n<div class=\"cn-block-disclaimer\">\n<div class=\"cn-block-disclaimer__icon\">\n            <svg class=\"icon icon-info\" aria-hidden=\"true\"><use xlink:href=\"#icon-info\"><\/use> <\/svg>        <\/div>\n<p class=\"cn-block-disclaimer__content\">\n            Disclosure: The views and opinions expressed here belong solely to the author and do not represent the views and opinions of crypto.news\u2019 editorial.        <\/p>\n<\/p><\/div>\n<p><!-- .cn-block-disclaimer --><\/p>\n<p>Stablecoins have quickly grown into a prominent market, but that doesn\u2019t mean their staying power has stopped being questioned. The Bank for International Settlements recently brought this matter up once again, with its new <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.bis.org\/publ\/arpdf\/ar2025e3.htm\" target=\"_blank\" rel=\"nofollow\">report<\/a> claiming stablecoins fail at three crucial criteria that any good money must satisfy: singleness, elasticity, and integrity. But personally, I can\u2019t quite agree with that assessment.\u00a0<\/p>\n<div id=\"cn-block-summary-block_23dffde4ffae008df2e554249f035127\" class=\"cn-block-summary\">\n<div class=\"cn-block-summary__nav tabs\">\n        <span class=\"tabs__item is-selected\">Summary<\/span>\n    <\/div>\n<div class=\"cn-block-summary__content\">\n<ul class=\"wp-block-list\">\n<li>BIS critique vs. reality: The Bank for International Settlements claims stablecoins fail at singleness, elasticity, and integrity \u2014 but the argument overlooks how these apply in practice.<\/li>\n<li>Singleness isn\u2019t absolute: Like bank deposits during crises (e.g., SVB), stablecoins can temporarily deviate, but USDC\/USDT still redeem 1:1 and function when banks are closed.<\/li>\n<li>Elasticity is different, not absent: Banks rely on settlement delays to create liquidity, while stablecoins settle instantly. Mechanisms like flash loans show that elasticity can be coded in.<\/li>\n<li>Integrity cuts both ways: Banks stop less than 1% of illicit flows, while blockchain transparency enables better tracing and even recovery of stolen funds.<\/li>\n<li>Work in progress, not failure: Stablecoins don\u2019t need to mimic banks \u2014 they just need to preserve value, move efficiently, and maintain trust, often doing so in ways banks can\u2019t.<\/li>\n<\/ul><\/div>\n<\/div>\n<p><!-- .cn-block-summary --><\/p>\n<p>Admittedly, stablecoins aren\u2019t perfect. Despite achieving considerable growth, the market is still small compared to traditional banking, and predictions about its future advancement have already been dialed back lately. JPMorgan, for example, now <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.reuters.com\/business\/finance\/jpmorgan-wary-stablecoins-trillion-dollar-growth-bets-cuts-them-by-half-2025-07-03\/\" target=\"_blank\" rel=\"nofollow\">sees<\/a> the stablecoin market reaching $500 billion by 2028 \u2014 down by half compared to the trillion-dollar projections that some were betting on just last year.\u00a0<\/p>\n<p>Moreover, stablecoins have yet to see widespread adoption beyond crypto-native platforms. In other words, they still have a long way to go before they can become mainstream financial tools or rival banks in scale.\u00a0<\/p>\n<p>But that doesn\u2019t mean they fail the three tests BIS used to dismiss them. In fact, I would argue that they might pass them better than banks do. It\u2019s all about how we look at it.<\/p>\n<p>    <!-- .cn-block-related-link --><\/p>\n<h2 class=\"wp-block-heading\">Singleness: A practical perspective<\/h2>\n<p>The BIS report argues that stablecoins lack \u201csingleness\u201d \u2014 the idea that every unit of money should be worth the same as any other unit. On paper, this sounds reasonable. In practice, however, singleness is never perfect. Even bank deposits can lose value or become illiquid in stressful times.<\/p>\n<p>Take USDC (USDC) and Tether (USDT), the two biggest and most well-known stablecoins. They\u2019re no less \u201csingle\u201d than traditional bank deposits. Holders can redeem them for U.S. dollars at face value. Sometimes the market price deviates slightly, but the same can be said for bank deposits. Just look back at the Silicon Valley Bank <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.law.uw.edu\/news-events\/news\/2023\/svb-collapse\" target=\"_blank\" rel=\"nofollow\">collapse<\/a> \u2014 some depositors sold their claims at a discount so they could get out faster. That\u2019s not so different from USDC temporarily trading below its peg during the same crisis because people were skittish about where the reserves were held.<\/p>\n<p>Stablecoins, however, offer something banks don\u2019t: the ability to absorb immediate demand. On weekends or holidays, when the banking system is closed, you can still trade USDT or USDC. Tokenized bank deposits \u2014 if they ever gain traction \u2014 would likely behave the same way. So if we\u2019re fair, stablecoins aren\u2019t failing singleness; they\u2019re just showing how the concept itself faces obstacles in real-world conditions.<\/p>\n<h2 class=\"wp-block-heading\">Elasticity: Faster doesn\u2019t mean weaker<\/h2>\n<p>Next up: elasticity \u2014 the idea that a money system should expand or contract to meet real economy demands. The BIS claims stablecoins lack elasticity because they require cash in advance. You can\u2019t spend what hasn\u2019t been minted yet, and additional issuance requires upfront payment by holders.<\/p>\n<p>But here\u2019s the catch: stablecoin transactions settle very differently from traditional banking. With banks, when you transfer funds, it often takes at least one full business day for the money to settle. During that time, banks can effectively \u201cprint\u201d temporary money because the same funds might appear in two places at once: the sender\u2019s account still shows the balance while the recipient\u2019s bank processes the incoming payment. This gap is one of the ways banks maintain liquidity and keep payments flowing, even when the actual cash hasn\u2019t moved yet.<\/p>\n<p>Stablecoin transactions work differently because settlement happens instantly on the blockchain. The moment a transaction is confirmed, the funds are transferred \u2014 there\u2019s no \u201cmoney in transit\u201d like there is with banks. That said, it is possible to build crypto mechanisms that mimic bank-like liquidity.<\/p>\n<p>One way of doing that is through flash loans, where essentially \u201cunbacked\u201d stablecoins are borrowed and repaid within the same blockchain transaction. This means liquidity is provided instantly, without the risk of the system being left with bad debt.\u00a0<\/p>\n<p>It\u2019s a different model, but it shows stablecoins don\u2019t have to copy banks exactly \u2014 they can build elasticity right into the code, settling transactions fast while still expanding when needed for the functioning of the system.<\/p>\n<h2 class=\"wp-block-heading\">Integrity: Is the banking system really safer?<\/h2>\n<p>Finally, the BIS report raises the issue of integrity: how well a money system prevents illicit activity and ensures compliance. Banks have decades of anti-money laundering measures in place. Crypto, by design, is more open \u2014 and that worries regulators.<\/p>\n<p>But traditional banking AML is hardly foolproof. UN estimates <a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/regulationinnovation.org\/impact\/financial-crime\/\" target=\"_blank\" rel=\"nofollow\">suggest<\/a> that less than 1% of financial crime is actually stopped by today\u2019s systems. In crypto, hacks do happen \u2014 and they\u2019re incredibly frustrating \u2014 but the transparency of blockchains makes tracing stolen funds possible in ways banks can\u2019t match.\u00a0<\/p>\n<p>As a result, a significant portion of stolen crypto funds can eventually be recovered. Maybe not all of it, but it\u2019s still far better than the tiny fraction of illicit funds intercepted in the traditional banking system.<\/p>\n<h2 class=\"wp-block-heading\">Stablecoins are a work in progress \u2014 but that doesn\u2019t mean banks win<\/h2>\n<p>In short, dismissing stablecoins because they operate differently from banking completely misses the point. Stablecoins don\u2019t need to be banks to succeed \u2014 they just need to do what money is supposed to do: hold its value, move when needed, and maintain trust.<\/p>\n<p>On all three fronts \u2014 singleness, elasticity, and integrity \u2014 the comparison is far more nuanced than the BIS report suggests. If anything, the test should push banks to evolve as well. After all, the future of money isn\u2019t about defending legacy models; it\u2019s about building systems that actually work for the people using them.<\/p>\n<p>    <!-- .cn-block-related-link --><\/p>\n<div class=\"cn-block-author author-card\">\n<div class=\"author-card__photo\"><\/div>\n<p><!-- .author-card__photo --><\/p>\n<div class=\"author-card__content\">\n<div class=\"author-card__name\">\n                Michael Egorov            <\/div>\n<p><!-- .author-card__name --><\/p>\n<div class=\"author-card__bio\">\n<p><b>Michael Egorov<\/b><span style=\"font-weight: 400;\"> is a physicist, entrepreneur, and crypto maximalist who stood at the origins of DeFi creation. He is a founder of Curve Finance, a decentralized exchange designed for efficient and low-slippage trading of stablecoins. Since the inception of Curve Finance in 2020, Michael has developed all his solutions and products independently. His extensive scientific experience in physics, software engineering, and cryptography aids him in product creation. Today, Curve Finance is one of the top three DeFi exchanges regarding the total volume of funds locked in smart contracts.<\/span><\/p>\n<\/p><\/div>\n<p><!-- .author-card__bio --><\/p>\n<div class=\"author-card__social\">\n<p><a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/www.linkedin.com\/in\/michael-egorov\/\" class=\"community-link\" target=\"_blank\" rel=\"nofollow\" aria-label=\"LinkedIn\"><\/p>\n<p>    <svg class=\"community-link__icon\" aria-hidden=\"true\">\n        <use xlink:href=\"#icon-social-linkedin\"><\/use>\n    <\/svg><\/p>\n<p><\/a><\/p>\n<p><a rel=\"nofollow\" target=\"_blank\" href=\"https:\/\/x.com\/newmichwill\" class=\"community-link\" target=\"_blank\" rel=\"nofollow\" aria-label=\"Twitter\"><\/p>\n<p>    <svg class=\"community-link__icon\" aria-hidden=\"true\">\n        <use xlink:href=\"#icon-social-twitter\"><\/use>\n    <\/svg><\/p>\n<p><\/a><\/p><\/div>\n<p><!-- .author-card__social --><\/p><\/div>\n<p><!-- .author-card__content --><\/p><\/div>\n<p><!-- author-card --><\/p>\n<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Disclosure: The views and opinions expressed here belong solely to the author and do not represent the views and opinions of crypto.news\u2019 editorial. Stablecoins have quickly grown into a prominent&hellip;<\/p>\n","protected":false},"author":1,"featured_media":9310,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-9309","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cryptocurrency"],"_links":{"self":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/9309","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/comments?post=9309"}],"version-history":[{"count":1,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/9309\/revisions"}],"predecessor-version":[{"id":9311,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/posts\/9309\/revisions\/9311"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/media\/9310"}],"wp:attachment":[{"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/media?parent=9309"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/categories?post=9309"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bitunikey.com\/news\/wp-json\/wp\/v2\/tags?post=9309"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}