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Imminent Arrival of Stablecoins on Bitcoin, Hints Lightning Labs CEO

2 mins
Updated by Ryan James
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In Brief

  • Lightning Labs, led by CEO Elizabeth Stark, prepares to integrate stablecoins and tokenized assets into Bitcoin.
  • Stark announces the plan during FT Live's Crypto and Digital Assets Summit in London.
  • The initiative aims to leverage Bitcoin's security and Taproot upgrade for scalable, low-cost transactions.
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In a significant move that could redefine financial transactions on Bitcoin (BTC), Lightning Labs is preparing to introduce stablecoins and other tokenized assets.

Elizabeth Stark, CEO of Lightning Labs, announced this development during her appearance at FT Live’s Crypto and Digital Assets Summit in London.

Lightning Labs Unveils Plan to Integrate Stablecoins on Bitcoin Network

Stark revealed that the development team at Lightning Labs has already begun trial runs of their new protocol on the Lightning Network.

“We released an early part of the code in October and recently demoed the first-ever transaction on Lightning of an asset. The idea is to have crypto dollars and stablecoins on the Bitcoi,” Stark explained.

Stablecoins and tokenized assets typically face high fees and scalability issues on other blockchains. Stark remarked that Bitcoin’s network is ideal for these challenges due to its robust security and decentralized nature.

Read more: A Guide to the Best Stablecoins in 2024

The initiative benefits from Bitcoin’s Taproot upgrade, which was implemented in late 2021. This upgrade boosts the blockchain’s scripting abilities and privacy features. It supports complex contracts and wider use cases necessary for stablecoins.

In October 2023, the company launched the Taproot Assets protocol’s alpha version on the main network. This move enables the issuance of assets like stablecoins on the Bitcoin network.

Additionally, Stark highlighted the rising role of stablecoins in regions plagued by economic instability, high inflation, or falling fiat currencies.

“The stickiest users have been those looking for a stable store of value. In some cases, they’re using Bitcoin. In other cases, they’re using stablecoins, and in some cases, it’s a combination of both,” she noted.

Tether (USDT) and Circle (USDC) now hold more US Treasury bonds than many major nations, highlighting the increasing importance of stablecoins as key financial instruments. Stark pointed out that although stablecoin holders do not earn interest, the security and stability of these digital assets are invaluable.

Stark also touted the advantages of using the Lightning Network for these transactions.

“Compared to traditional systems like Visa, where fees in the U.S. can be as high as 3%. The cost of transacting stablecoins on the Lightning Network can be dramatically lower, often just a cent or less,” she said.

She further detailed the role of Lightning Labs in the evolving digital asset ecosystem and said it will be the infrastructure.
She explained that the infrastructure Lightning Labs is developing will enable other financial institutions to issue real-world tokenized assets. These include gold and fiat-backed instruments.

By integrating stablecoins and other assets into its system, Bitcoin is set to broaden its use not only as an investment but also as a medium of exchange. This expansion will enhance its appeal and utility, increasing its reach in the financial world.

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Shota Oba
After interning at a domestic blockchain media company while enrolled at a university in international relations, he worked as an intern trainee at two foreign crypto asset exchanges. Currently, as a journalist, he focuses on the Japanese crypto asset market, both technical and fundamental analysis. He has been trading crypto assets since 2021 and is interested in economic and social affairs.