Debates about stablecoins at the World Economic Forum

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Stablecoins and crypto tokens for almost all other types of assets were one of the hot topics at the World Economic Forum's annual meeting in Davos this week. In several rounds, representatives from central and commercial banks clashed with representatives of cryptocurrencies over the future of the financial sector.

Brian Armstrong, founder and CEO of the trading platform Coinbase, described the future of the financial sector from the perspective of the US crypto industry in a presentation, suggesting that in a few years there might only be ten conventional national currencies left. The rest of the world would have moved to US-based stablecoins and Bitcoin, according to Armstrong's provocation.

Stablecoins are digital money pegged to the exchange rate of conventional currencies (or other assets). Stablecoins are usually backed by reserves in these currencies or by suitable government bonds. Last year, they reached a total capital sum of almost 300 billion euros. The majority are stablecoins pegged to the US dollar: USDT (from the company Tether) and USDC (from Circle).

Donald Trump's Genius Act from the summer of 2025 has given stablecoins and the US crypto industry as a whole a boom that Europe's central banks are also observing very closely. France's central bank has also put the topic on the agenda of the French G7 presidency in 2026. In this context, they want to discuss possible harmonizations in regulation, among other things, said François Villeroy de Galhau, Governor of the French central bank.

Dominant Dollar Coins

The US crypto industry's upward trend, thanks to its friendly US administration, has been contributed to by the industry itself. According to Brad Garlinghouse, CEO of the crypto fintech company Ripple, they joined forces to elect this administration. If the industry has its way, the US administration must take further regulatory steps. Europe's MiCA regulation is already further ahead, according to Armstrong.

The cryptocurrency representatives from the USA are demanding that the US administration lift the existing ban on interest on stablecoins. In the course of greater tokenization of assets, for example, of real estate, government bonds, or funds, this will develop naturally, predicted Bill Winters, Group CEO of Standard Chartered Bank.

According to the crypto bankers, established investment companies such as Blackrock or Apollo want to offer fund shares in the form of tokens in the future. The Belgian financial service provider Euroclear is also driving forward corresponding projects. Tokens for real estate and funds offer companies new sources of liquidity and smaller investors easier access to financial market products, explained Valérie Urbain, CEO of Euroclear, in Davos.

Flight into (Dollar) Stablecoins

Dan Katz from the International Monetary Fund also cited inclusion and better financial market access as undeniable advantages of stablecoins and tokenization. In many African countries, US dollar-based stablecoins are extremely popular, reported Vera Songwe, founder of the Africa-focused Liquidity and Sustainability Facility.

Customers from countries with high inflation fled into US-based stablecoins and thus had easy access to the international financial system. Entrepreneurs have to go through the dollar anyway for international business transactions, said Songwe. Above all, however, the currently high transaction costs of classic remittance services can be drastically reduced. With currently around 7 billion, these exceeded the entire development aid flowing to the continent, according to Songwe.

There are initial approaches to creating African stablecoins, as well as attempts by individual African countries to have stablecoins completely banned. Because with the "dollarization" of their economy, governments in the respective countries lose powerful instruments with which they can control and shape the economic development of their own country, warned many of the classic banking professionals in Davos. Songwe expressly regretted that Europe's financial industry offers no alternatives to dollar-based coins. Europe is too slow, she said.

Is Europe missing the boat?

A good example of the leisurely pace of Europeans is the digital euro. The project has been officially running for this since 2021. It was originally launched to counter Facebook's Diem project (formerly Libra). However, Diem was discontinued in 2022, and from 2026, there will only be a wholesale version of the digital euro for transactions between banks, explained Villeroy de Galhau.

Other regions are significantly faster. For example, Brazil has had the instant payment system PIX from the country's central bank since 2020. China wants to introduce interest payments on the digital yuan, and India, which has introduced the digital rupee, is currently proposing to the BRICS states to make their digital currencies more easily exchangeable.

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