• MUFG Bank (MUFG)'s Lee Hardman argues stablecoins are better suited than Bitcoin and other cryptos to act as money due to their stable value, enabling faster global payments and lower fees.
  • Their predictable unit of account, when reliably pegged to fiat currencies like the USD, supports broader transaction acceptance, though reliability hinges on issuer backing mechanisms.
  • This analysis comes amid stablecoin growth driving demand for US Treasuries and reinforcing USD dominance, with regulatory moves like the US GENIUS Act aiming to enhance safety.

Stablecoins are increasingly viewed as superior to volatile cryptocurrencies like Bitcoin for monetary functions, according to MUFG Bank's Senior Currency Analyst Lee Hardman. In a statement on February 17, 2026, Hardman highlighted that stablecoins' stable value makes them more acceptable for transactions, enables faster global payments, and often carries lower fees than traditional banks or card networks. Pegging to traditional currencies also provides a predictable unit of account, though this reliability depends critically on the issuer or backing mechanism, according to people familiar with the matter.

Hardman's analysis ties into broader economic trends, where stablecoin growth, particularly for USD-pegged tokens such as USDT and USDC, is driving demand for US Treasuries and cash equivalents. For instance, Tether has issued $50 billion in new USDT over the past year, with approximately 75% of reserves held in low-risk assets, potentially reinforcing the USD's role as the global reserve currency amid diversification flows. This momentum aligns with expected Federal Reserve rate cuts in 2026, as inflation shows signs of easing, with January 2026 CPI reported at 2.4% headline.

Efforts to restructure the regulatory landscape have hit a snag in some regions, but the US GENIUS Act mandates 1:1 high-quality reserves, regular audits, and banking compatibility for stablecoins to enhance safety and USD competitiveness. US Treasury Secretary Scott Bessent views stablecoins as bolstering the USD's reserve status, while European Central Bank officials warn they could hinder the euro's internationalization. In the UK, consultations are ongoing to expand T-bill markets for GBP stablecoins, reflecting a push for non-USD alternatives.

Without a deal on broader adoption, the crypto sector might face increased volatility, but stablecoins are acting as "digital cash" for trading, payments, and liquidity. However, they pose risks like reduced bank deposits and fee income if adoption accelerates, according to Federal Reserve notes that highlight limited substitution threat to insured bank deposits since stablecoins pay no interest and lack FDIC insurance. Hardman emphasized that "institutional investors are really focused on regulatory stability," and stablecoins' growth trajectory in this regard has been steady, though past stresses, such as the 2023 regional bank crisis that briefly de-pegged USDC, underscore ongoing reliability concerns.

Attempts to reach out to MUFG Bank for additional comments were unsuccessful, but sources indicate that the bank's analysis, from one of the world's largest financial institutions with over $3 trillion in assets, ties stablecoins to the USD outlook amid Fed easing and global FX shifts. In contrast, Bitcoin has faced recent struggles, with a selloff amid Fed worries highlighting the contrast with stablecoin momentum. Looking ahead, short-term adoption could boost US Treasury demand and USD reliance, while long-term prospects include potential structural US debt financing sources, though bank funding disruptions remain a risk if deposits shift significantly.