A new report indicates that stablecoins, currently a $163 billion market, could grow to represent 10% of the U.S. money supply, hinging on regulatory clarity, which appears increasingly likely under the incoming Donald Trump‘s administration.
What Happened: "Stablecoins have the potential to revolutionize global financial systems, bridging gaps that traditional methods struggle to address," the report by Zodia Markets and Standard Chartered states.
Presently, stablecoins constitute less than 1% of the U.S. M2 money supply and foreign exchange transactions.
However, their scalability and utility in cross-border payments, remittances and savings position them as a transformative digital asset class.
The report highlights that stablecoins are primarily pegged to fiat currencies, with USD-backed coins dominating the market.
Tether USDT/USD accounts for 73% of the total stablecoin market, followed by USD Coin USDC/USD at 21%.
Stablecoin transactions have grown steadily, averaging $425 billion per month in 2024, but this remains a fraction of the $2.1 trillion traded daily in foreign exchange markets.
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"With the right guardrails, stablecoins could integrate seamlessly into traditional financial systems, amplifying efficiency and accessibility," the report notes.
Regulation could spur a tenfold increase in stablecoin use, particularly for cross-border payments and foreign exchange-equivalent transactions.
The report also highlights stablecoins’ role in accelerating financial inclusion: "By enabling secure and transparent transactions, stablecoins fulfill one of digital assets’ early promises—to democratize access to financial tools."
Stablecoins have demonstrated their utility in addressing challenges in traditional finance, particularly in regions with limited banking infrastructure.
By providing a digital alternative for saving and transacting in USD terms, stablecoins offer a potential lifeline for the 1.4 billion unbanked individuals globally.
The report’s authors Geoff Kendrick and Nick Philpott conclude that stablecoins are the cryptocurrency industry’s “first killer app.”
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