Stablecoins are digital assets designed to maintain a stable value relative to fiat currencies or other assets. Initially, they were primarily used for trading, lending, and other activities on digital asset trading platforms. The total market capitalization of stablecoins has reached $163 billion, with Tether (USDT) and USD Coin (USDC) dominating the market. These stablecoins mainly operate on blockchain networks such as Ethereum and TRON.
- Users globally value the ability to hold tokenised representations of fiat currencies (in the case of stablecoins, mainly USD) directly in their own custody, rather than relying on a bank account, which may be unreliable or inaccessible
- Stablecoins are also being adopted for cross-border payments, payroll, trade settlement, and remittances
- In emerging markets, adoption of stablecoins for payments, currency substitution, and access to high-quality forms of yield is accelerating
- When asked about non-crypto stablecoin activities, the most popular use of stablecoins is currency substitution (69%), followed by paying for goods and services (39%), and cross-border payments (39%)
- It is abundantly clear that stablecoins have evolved from mere trading collateral to a general-purpose digital dollar instrument in the countries surveyed
At present, stablecoins are equivalent in size to only 1% of US M2 transactions and just 1% of FX transactions. As the sector becomes legitimised, a move to 10% on each measure is feasible. Both cross-border payments and (via non-USD stablecoins) FX-equivalent transactions are key growth areas that could achieve this.
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