Fed's Potential Rate Cut Could Dampen Demand for Tokenized Debt, Experts Say

Mars Finance reports that the Federal Reserve is likely to cut interest rates this Wednesday for the first time since 2020, ending the most aggressive monetary policy tightening in decades.

Multiple observers, including Arthur Hayes, Chief Investment Officer and co-founder of BitMEX, have suggested that the upcoming low-interest rate environment could suppress demand for tokenized Treasury bonds or digital representations of U.S. government bonds traded on blockchains.

However, Alexander Deschatres, Head of Sponsor Coverage for Asia at Standard Chartered Bank, believes that stablecoins could mitigate the negative impact on Treasury and money market tokens.

"The $170 billion stablecoin supply represents a pool of funds potentially convertible into money market tokens and Treasury bond tokens, which could offer a buffer against the negative implications of the Fed's rate cut," Deschatres told CoinDesk during a SC Ventures media event on the sidelines of the Token2049 conference in Singapore. SC Ventures is Standard Chartered Bank's innovation arm.