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Shares of Circle Internet Group (NYSE: CRCL) fell this week, finishing down 11.9%. The drop comes as the S&P 500 fell 0.3% and the Nasdaq-100 fell 0.5%.
U.K. banks opt for tokenization
A consortium of Britain's largest banks announced on Friday that they are moving forward with blockchain-based deposit tokens, following encouragement from Bank of England Governor Andrew Bailey.
Tokenization is the process of creating one-of-a-kind digital representations of assets, like deposits and bonds, that are recorded on a blockchain and can be stored by customers in their digital wallets. This approach offers many of the benefits of blockchain technology, such as faster transactions, increased transparency, and better security, without some of the risks associated with the adoption of stablecoins. Bailey specifically cautioned financial institutions last summer about creating their own stablecoins, questioning whether stablecoin alternatives are even necessary given tokenization. While not against stablecoins, he believes that they could weaken banking by removing liquidity from the system.
While President Donald Trump's Genius Act has provided clearer frameworks for stablecoins in the U.S., major banks in the U.S. appear to be leaning toward tokenization over stablecoin adoption.
Circle's valuation problem deepens
Circle has been riding high on expectations that traditional finance would embrace its stablecoin, USDC, as the bridge between conventional banking and crypto. It seems, at least for the moment, that tokenization might curb the adoption of USDC. Circle's stock already has significant growth baked into its pricey valuation, and I would stay away.
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This article has been published in fool.com via Yahoo News.
Why Did Circle Internet Stock Fall 11.9% This Week?
Will tokenization sap demand for stablecoins?
finance.yahoo.com
