While the fintech industry fixates on the current crop of digital assets, Polygon is preparing for a Stablecoin super cycle that could see the number of stablecoins explode to over 100,000 within five years.
Speaking to The Fintech Times, Aishwary Gupta, the firm’s global head of payments and RWA, outlined a future where digital currencies become instruments of economic sovereignty rather than tools of subversion and the start of a stablecoin super cycle.
Empowering Sovereignty, Not Losing Control
The prevailing narrative among many regulators is fear—specifically, that stablecoins strip central banks of their monetary influence. Gupta challenges this view, arguing that when integrated correctly, stablecoins actually extend a currency’s power.
He pointed to the yen-pegged JPYC as a prime example of this shift. As Japan navigates its economic strategy, stablecoins are quietly emerging as a mechanism for the government to maintain liquidity in its own bond market.
“If done right, I don’t personally agree that the government is losing control,” Gupta told Mark Walker. “It’s more like giving more power to any country’s currency.”
He drew a parallel to the US dollar’s global dominance. As the traditional petrodollar demand fluctuated, the demand for US-pegged stablecoins surged, effectively reinforcing the dollar’s utility globally. Gupta suggests that monetary policy decisions, such as Federal Reserve rate changes, impact stablecoins just as they do traditional fiat, meaning the government retains its macroeconomic levers.
“It enables them,” Gupta explained. “If the impact of people holding a US dollar is getting impacted by a federal decision, that same thing will apply on the stablecoins.”
The Battle for Cheap Capital
However, while governments may find utility in stablecoins, traditional commercial banks face a more direct threat. The core issue lies in capital flight.
“The money that was sitting with the banks with literally zero interest rate… people do not want to hold it anymore,” Gupta said. “Why? Because they can alternatively hold stable coins in the same currency and they can start generating yields on top of it.”
This movement of low-cost capital—often referred to as CASA (Current Account Savings Account)—reduces a bank’s ability to create credit. To stem this tide, Gupta predicts that major financial institutions will launch their own ‘deposit tokens’ to ringfence liquidity.
Using JP Morgan as a hypothetical example, he illustrated how a deposit token could allow a customer to interact with crypto exchanges without the funds ever leaving the bank’s balance sheet.
“The money can still lie here with JPMorgan, but this essentially JPMD token is a reflection of the same $250,000,” Gupta noted. This prevents the capital from flowing out to external issuers like Circle, allowing banks to retain the deposits they need for lending.
A Fragmented Future
This defensive innovation from banks, combined with consumer apps seeking to bypass card network fees, will drive the market toward a fractured landscape. Gupta predicts a surge from the current offerings to “at least a hundred thousand stablecoins” in the next five years.
“Everyone wants to offer the financial layer,” he said. “It’s a Stablecoin super cycle… but then later they will realise it’s not just about minting a token. There has to be a utility attached to it.”
He envisions a scenario where major platforms—from Amazon to regional super-apps like Noon in Dubai—issue their own currencies to trap value within their ecosystems. This, however, creates a “big confusion” for merchants and consumers alike.
The solution, according to Gupta, will be the rise of settlement layers or “mesh” services that abstract the complexity away.
“All these stablecoins would just effectively go into the backend,” he explained. A user might pay in their preferred loyalty token, while the merchant automatically receives USDC, with the conversion handled seamlessly by an aggregator like Ubix.
Why CBDCs Stalled
Amidst this private sector explosion, Central Bank Digital Currencies (CBDCs) appear to be losing momentum on the retail front. Gupta attributes this to a fundamental design flaw: isolation.
“Why CBDCs did not get a lot of traction… is a very simple logic,” Gupta said. “I have a CBDC, what do I do with it?”
He highlighted that most CBDCs are built on siloed private ledgers like R3‘s Corda or Hyperledger, where there are no other assets to purchase. In contrast, stablecoins on public chains like Polygon allow users to instantly transact with NFTs, tokenised securities, and other on-chain assets.
“JPCY on-chain enables me to buy all these things because it is sitting on-chain and all these assets are sitting on-chain,” he added.
While wholesale CBDCs may still find a role in inter-bank settlement, Gupta believes the retail war will be fought between bank-issued deposit tokens and private stablecoins, ultimately converging into a massive, multi-token economy.
“We are at the very beginning of all these things,” Gupta concluded.
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