Core Viewpoint - Goldman Sachs is exiting its support for the Apple Card, marking a retreat from its consumer Fintech ambitions, which struggled despite the initial strategic rationale [1][2]. Group 1: Goldman Sachs and Apple Card - Goldman Sachs will incur an approximate $1 billion loss on its outstanding credit balances as it transfers the Apple Card business to JPMorgan [2]. - The Apple Card has a delinquency rate of 4%, which is higher than the industry average of 3.05%, complicating the deal due to the large number of subprime customers [2]. Group 2: JPMorgan's Position - JPMorgan, as the largest bank in the US by assets, is well-positioned to operate the Apple Card business more profitably, leveraging its leadership in the credit card market [3]. - JPMorgan is developing JPMCoin, the first bank-issued stablecoin, which could enhance its digital services and reduce transfer and payment costs [4]. - Jamie Dimon, CEO of JPMorgan, is recognized as a leading figure in the banking industry and has shifted his stance on crypto, now viewing it as a transformative technology [4].

Industry Investment Rating - The industry investment rating is maintained at "Outperform" [1] Core Insights - The report discusses the deep impact of stablecoins on the financial system, including effects on the Federal Reserve's balance sheet, commercial banks, and financial infrastructure [4][6] - It highlights the potential for stablecoins to disrupt traditional banking and payment systems while also presenting new opportunities for financial IT service providers and blockchain companies [6] Summary by Sections 1. Impact of Stablecoins on the Financial System - Stablecoins act as a stable digital representation of value, potentially influencing monetary control systems without directly affecting them [13] - The Federal Reserve may face indirect impacts on its balance sheet due to changes in demand for government bonds and bank deposits caused by stablecoin transactions [14] - Stablecoins can challenge existing monetary policy tools by increasing liquidity fluctuations and affecting short-term interest rates [22][23] 2. Comparison of Stablecoin Development in China and the U.S. - The report contrasts the motivations behind stablecoin development in the U.S. and China, emphasizing the need for regulatory frameworks to adapt to the evolving landscape [10] 3. Investment Recommendations - The report suggests that while stablecoin trading is illegal in mainland China, there are growth opportunities for financial IT service providers and payment solution companies [6] - It recommends focusing on banks and investment banks that are exploring virtual asset trading and innovative business models [6] 4. Effects on Commercial Banks - Stablecoins may lead to a disintermediation effect, impacting the balance sheets of commercial banks by shifting deposits to custodial accounts [36] - The report notes that banks may need to adjust their liquidity and interest rate risk management strategies in response to the rise of stablecoins [40] 5. Impact on Financial Infrastructure - Stablecoins can enhance payment efficiency by enabling real-time transactions and reducing costs, particularly in cross-border payments [42] - The competition from stablecoins may drive traditional payment systems to adopt distributed ledger technology to improve their services [42]

Group 1 - The core viewpoint is that the application scenarios of stablecoins have expanded from cryptocurrency trading to multiple fields since the inception of USDT in 2014 [1] - Stablecoins have developed through several stages, including the launch of JPMCoin by JPMorgan in 2019 for institutional cross-border trade settlements, and the explosion of DeFi and the introduction of PayPalUSD in 2020 [1] - Currently, stablecoins have formed four main application scenarios: cryptocurrency trading, cross-border payments, consumer payments, and traditional capital markets [1] Group 2 - The future market size of stablecoins is expected to reach $3.5 trillion, based on neutral scenario calculations across four major scenarios [2] - In the cryptocurrency sector, with a 10% growth rate in the cryptocurrency market, stablecoins are projected to reach $36.33 billion by 2030, accounting for 8.22% of the market [2] - In cross-border payments, assuming stablecoins capture 20% of the market share, the demand will reach $29 trillion; for daily consumer payments, a 10% share would result in a demand of $12.16 billion; and for traditional capital markets, the demand for tokenization of assets is estimated at $13.33 billion [2]