31/07/2025

BIZ & FINANCE THURSDAY | JULY 31, 2025

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Will stablecoins become everyday money?

UBS Q2 earnings jump to US$2.4b, beating estimates ZURICH: UBS’s second-quarter profit more than doubled from a year earlier, comfortably ahead of expectations, as it joined other major banks in making the most of a surge in trading activity amid market turmoil. Switzerland’s largest bank also said yesterday that it sees a high level of readiness among investors and companies to deploy capital as“conviction”around the macro outlook strengthens. But it was too early to say when deals in the pipeline would be executed, it added. Net profit attributable to shareholders came in at US$2.4 billion (RM10.2 billion), beating a company provided consensus estimate of US$2.045 billion. In its investment banking division, revenues for global markets surged 25% during a quarter when trading cues were focused on ructions caused by US President Donald Trump’s tariff war. At the same time, transaction-based income for its global wealth management division rose 12%. Some of the earnings beat can be attributed to a US$427 million net release of provisions and contingent liabilities related to the resolution of a Credit Suisse litigation issue, as well as a net income tax benefit of US$209 million. UBS said it expects trading and transactional activity to become more normalised in the quarter ahead. Net interest income in global wealth management and the Swiss business would likely be broadly stable in Swiss francs, while there would be a low single-digit percentage increase in US dollar terms. Integration of its one-time rival Credit Suisse remained on track, UBS said in its second-quarter statement, with one third of client accounts booked in Switzerland migrated. Cumulative cost reductions reached US$9.1 billion, or 70% of expected gross cost savings, it added. – Reuters SEOUL: South Korea’s LG Energy Solution (LGES) has signed a US$4.3 billion (RM18.2 billion) deal to supply Tesla with energy storage system batteries, said a person familiar with the matter, as the US company looks to reduce reliance on Chinese imports due to tariffs. The lithium iron phosphate (LFP) batteries will be supplied from LGES’s US factory in Michigan, the person said on condition of anonymity because the details were not public. LGES announced earlier yesterday that it had signed a US$4.3 billion contract to supply LFP batteries over three years globally, without identifying the customer or saying if they would be used in vehicles or energy storage systems. The South Korean company said last week it would try to offset sluggish electric vehicle demand by increasing sales of storage batteries thanks to a global surge in demand for power driven by data centres to train artificial intelligence. “In accordance with our agreement, we are unable to disclose the customer’s identity due to confidentiality obligations,“ LGES told Reuters. Tesla did not immediately respond to a request for comment.

are considering creating their own stablecoins. This is a way for the online giants to lower fees and make customer loyalty programmes more enticing, said Catalini. Having custom stablecoins would also allow the companies to offer financial services and, if widely adopted, could deprive banks of deposits they use for lending. A broad shift to stablecoin would spare multinational companies from adverse effects exchange rates can have on earnings but raises questions about security. The traditional financial system invests heavily in protecting customers from fraud and keeping people’s accounts secure. Business dealings Stablecoins “are likely to have far greater consequences” when it comes to business between companies, according to Kim. Liu Qiangdong, founder of Chinese conglomerate JD.com, has spoken about how stablecoin could slash cross-border payment costs by 90% and completing transactions in seconds instead of days as is currently the case. Kim says generative AI agents capable of independently handling computer tasks are well suited to automatically tend to stablecoin transactions. – AFP Microsoft will likely sign the code, its president Brad Smith told Reuters earlier this month, while Meta Platforms declined to do so and cited the legal uncertainties for model developers. The EU enacted the guardrails for the use of AI in an attempt to set a potential global benchmark for a technology used in business and everyday life and dominated by the US and China. – Reuters

Another use, already offered by several startups, is enabling companies to pay workers living abroad directly in stablecoin instead of dealing with local currencies and financial systems. Online shops Small merchants selling wares online can use stablecoin transactions to improve margins and pay less to credit or debit card networks, according to MIT cryptoeconomics lab researcher Christian Catalini. Visa and Mastercard combined collected around US$187 billion (RM791 billion) in fees on card purchases in the US last year, according to the Merchant Payments Coalition. Conducting sales in stablecoins bypasses banks or payment systems, reducing transaction costs. E-commerce giants Amazon, Walmart, China’s JD.com and even travel platform Expedia officer, said in the blog post. He added, however, that Google was concerned that the AI Act and code of practice risk slowing Europe’s development and deployment of AI. “In particular, departures from EU copyright law, steps that slow approvals, or requirements that expose trade secrets could chill European model development and deployment, harming Europe’s competitiveness,“ Walker said.

o Digital dollars gain ground in daily life, with new US law accelerating their use in global payments, e-commerce, and payroll

NEW YORK: Stablecoins may not create overnight millionaires like Bitcoin once did, but they’re designed for more practical, everyday use. The GENIUS Act, a regulatory framework recently signed into law by US President Donald Trump, may boost stablecoins, digital currencies with values pegged to a country’s traditional currency. Here are potential uses for stablecoins, the most popular of which are Circle’s USDC and Tether’s USDT, both tied to the US dollar. Money transfers Most people who want to send money to one another, particularly across national borders, rely on services such as Western Union, Ria and MoneyGram, which

charge relatively high fees for the service. Stablecoins allow direct transactions between people, making funds instantly available to recipients, typically at lower fees. Sending money in the form of stablecoin has the added benefit of protecting its value “in places where the fiat currency is not particularly desirable because of issues like hyperinflation or government controls,” according to Henry Kim, a professor at York University in Canada. The GENIUS Act, passed by Congress in mid-July, should ramp up a trend of using stablecoins for cross-border payments, said Stanford University finance professor Darrell Duffie.

Google to sign EU’s AI code of practice despite concerns BRUSSELS: Alphabet’s Google will sign the European Union’s (EU) code of practice which aims to help companies comply with the bloc’s landmark artificial intelligence (AI) rules, its global affairs president said in a blog post yesterday, though he voiced some concerns. meet requirements under the Artificial Intelligence Act (AI Act), such as issuing summaries of the content used to train their general purpose AI models and complying with EU copyright law.

“We do so with the hope that this code, as applied, will promote European citizens’ and businesses’ access to secure, first-rate AI tools as they become available,“ Kent Walker, who is also Alphabet’s chief legal

The voluntary code of practice, drawn up by 13 independent experts, aims to provide legal certainty to signatories on how to

Tesla signs US$4.3b LG battery deal to cut China dependence

Tesla chief financial officer Vaibhav Taneja said in April that US tariffs had an “outsized” impact on its energy business, since it sources LFP batteries from China. “We will also be working on securing additional supply chain from non-China-based suppliers, but it will take time,“ he said. Tesla this week also announced a US$16.5 billion deal to buy chips from Samsung Electronics’factory in Texas as South Korean companies expand their US presence to meet local demand. Three South Korean cabinet-level officials met US Commerce Secretary Howard Lutnick in Washington in a push to close a trade deal ahead of an Aug 1 deadline for 25% tariffs on US imports from South Korea to kick in, Seoul said yesterday. LGES is one of the few US producers of LFP batteries, a battery chemistry long dominated by Chinese rivals that have little presence in the US market. It started production of LFP batteries at its Michigan factory in May. The company said it was considering converting some electric vehicle battery production lines in the US to cater to energy storage systems in response to slowing EV demand.

Amid slowing EV sales, Tesla ramps up energy business with US-based battery supply.– PEXELS PIX