[Bitcoin Now] iM Securities: "Diversification of Virtual Asset Exchange Businesses Will Threaten Traditional Finance"

On September 16, iM Securities predicted that the diversification of business operations by virtual asset exchanges will pose a threat to traditional financial businesses.

Yang Hyunkyung, a researcher at iM Securities, stated, "With the passage of legislation related to stablecoins in the United States, there are growing expectations that stablecoin issuers will weaken banks' revenue models." She added, "However, the weakening of banks' revenue models is likely to accelerate not simply because of the emergence of stablecoin issuers, but rather due to the diversification of business operations by virtual asset exchanges that actually distribute and utilize these stablecoins."

She explained, "Stablecoin issuers act as a type of currency supplier by issuing coins backed by US dollar deposits and government bonds, but there are limitations to their ability to facilitate customer remittances, investments, and lending." She analyzed, "Virtual asset exchanges will threaten the core revenue sources of traditional financial businesses by offering a variety of financial services using stablecoins, such as derivatives, custody, payments, lending, and tokenized securities."

She also noted, "With the anticipated removal of USDT from the US market, which stablecoin will gain dominance in the future will depend on the strategic choices made by virtual asset exchanges. If a virtual asset exchange selects a particular stablecoin as a major trading pair (base pair), the trading volume of that stablecoin will surge, creating a network effect."

She predicted that virtual asset exchanges will eventually become comprehensive financial platform companies.

She continued, "According to Korbit Research, currently, the revenue of Korean virtual asset exchanges is heavily concentrated in trading revenue (98%), with other sources making up only 2%, indicating little diversification. In contrast, the US virtual asset exchange Coinbase shows revenue diversification: trading revenue (51%), stablecoins (22%), blockchain rewards (14%), lending and interest (6%), and ETFs and subscriptions (8%)."

She added, "Ultimately, the diversification of business operations by virtual asset exchanges is expected to have a negative impact on traditional financial intermediaries such as banks, securities companies, and asset management firms."