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Morgan Stanley predicts banks capitalize on stablecoin deposit demand


Banks will try to capitalize on the demand for stablecoin deposits amid exponential market growth. The report of Morgan Stanley‘s leading cryptocurrency strategist Sheena Shah stated this, writes CoinDesk.

Thus, in the report, the top manager pointed to the growth of the “stablecoins” market. From $20 billion at the beginning of the year to the current $137.7 billion, respectively.

Stablecoins sometimes allow you to receive more than 5% per annum on crypto deposits and open access to the decentralized finance (DeFi) sector. In addition, Shah believes that regulators and governments will inevitably react.

The growing interest in digital assets

According to the strategist, cryptocurrencies are traded on a par with risky assets due to the active use of leverage, as well as fiscal and monetary incentives.

She also noted the growing interest in digital assets from institutional investors. Altcoins are pulling market share from Bitcoin (BTC); due to lower prices in US dollars and a variety of use cases, Shaw added. According to her, we should expect the continuation of the “battle of blockchains”.

Because of the increased interest in cryptocurrencies on the part of institutional investors, the risk of increasing the concentration of BTC in the hands of a certain group of investors is growing, the expert added.

Bitcoin is not a fad

In September, Morgan Stanley created a division for the analysis of cryptocurrencies, transferring Sheena Shah to the position of chief analyst. Prior to that, she held the position of chief strategist for foreign exchange markets.

Recall that previously in October, Morgan Stanley CEO James Gorman said Bitcoin is not a fad. “I don’t consider cryptocurrencies a fleeting fashion, I don’t think they will disappear soon. I don’t know how much Bitcoin should or shouldn’t cost. But these things are not going away. And the underlying blockchain technology is obviously quite real and powerful”. Gorman said during a teleconference following the results of the third quarter of 2021.

According to him, Morgan Stanley does not provide retail clients with direct access to digital assets. But allows them to invest in cryptocurrencies through various funds. The head of the conglomerate noted that such activities “are not a major part of the business.”

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