Stablecoins' dominance due to limitations of US banking

Stablecoins rose to popularity as a result of limitations in the US financial system — particularly restricted banking hours and the lack of a non-USD trading pair, according to Jerald David, president of Arca Labs.

“So we start thinking about the reason why, we start talking about the nine-to-five banking hours,” David said during a panel at TokenizeThis 2025 event on April 16.

The panel discussion centered on yieldcoins or, essentially, the rising of cryptocurrencies that can generate yield through holding, staking or lending, like stablecoins.

“Well, nine-to-five banking hours don’t work, right? There are implementations right now of payment systems that are going to come to market very soon, that are a good combination of both yield-bearing instruments as well as stabletokens,” David said.

According to David, the need for stablecoins stems from the fact that the traditional US banking infrastructure doesn’t support round-the-clock transactions. “And this industry, as we all know, is a 24-hour industry.”

KYC for stablecoins

Know Your Customer procedures were a significant topic at the panel. One representative from Figure Markets said that everyone who owns a yield-bearing stablecoin would have to be KYC-ed for tax reasons.

But David pointed out that stablecoins have several use cases beyond yield generation, including payments. “Using this stable token to buy a cup of coffee is not something that really should require AML or KYC for somebody.”

Nick Carmi, head of exchange at Figure Markets, suggested that part of the solution could be a trust-based KYC system that allows users to carry their credentials across platforms. KYC is a process used by financial institutions to verify a user’s identity. It’s meant to prevent fraud, money laundering, and other illegal activities by ensuring users are who they claim to be.

Currently, users must complete separate KYC checks for each financial institution or service they use, creating friction and frustration — especially for those navigating multiple platforms or exploring different crypto ecosystems.

Magazine: Bitcoin payments are being undermined by centralized stablecoins