[BCG] Stablecoins – Five killer tests to gauge their potential

Stablecoins are having a breakout moment, with economic, strategic, and regulatory fundamentals driving adoption. Five killer tests can help market participants gauge their long-term potential.

Do stablecoins offer incremental value compared with existing forms of money movement?

In stark contrast to existing payments infrastructure, the potential that stablecoins offer to create incremental value is often characterized as being transformative.

• Transaction speed: Offers near to instant settlement regardless the origin or destination or the funds and/or size of the transaction.
• Transaction costs: Transaction costs from largest two networks are Ethereum at min. $0.01/trx) and Tron at $3–6/trx. On/Off ramping costs should also be added (up to 7% of value).
• Traceability: Blockchain gradient traceability, however data is complex to exploit or to consume.
• Automation potential: Programmability offers a unique way to introduce conditional payments features built on top of Blockchain based payments.

Is There a Market for Real-world Stablecoin Use Cases Outside Crypto Trading and De-Fi?

Real-world use cases still form a small share (8%) of total stablecoin transaction value (mainly in tokenized asset settlement and payments).

Are companies across the value chain building viable business models?

• Issuing Stablecoins: Stablecoin issuance has become a lucrative winner-takes-all business model, notably demonstrated by Tether and Circle. These companies generate significant revenues from interest on reserve assets and commission fees from stablecoin minting and burning, albeit that returns have been propped up by higher interest rates.
• Banking for Stablecoin Issuers and Reserve Holding: Not all companies should become stablecoin issuers. Perhaps counterintuitively, we believe most banks will be best served by prioritizing tokenized deposits over stablecoins, given their potential for superior capital productivity.
• Merchant Acceptance: Merchant acceptance solutions represent a nascent but developing use case. Acquirers and PSPs such as Worldpay and Nuvei already offer payouts to merchants in stablecoins, which can be a distinguishing value-add service to overcome delays caused by weekends and batch cut-offs.

Do geopolitical and regulatory drivers support mass adoption?

• The Trump effect on regulatory clarity: New US bills (e.g., STABLE Act, GENIUS Act) are shaping a clearer legal framework for stablecoin issuers.
• The Trump effect on geopolitics: Amid an uncertain trade war and protectionist policies, the dollar has recently come under pressure. The EU, where two-thirds of payments volume is processed through US companies, is increasingly focused on payments sovereignty through the Euro.
• Real world demand: In high-inflation environments, stablecoins are not just speculative tools; they are lifelines. Indeed, over 40% of stablecoin users in emerging economies rely on them for daily transactions such as retail and bill payments.
• Business model profitability: With rate normalization now established following a long period of low borrowing costs, stablecoin issuers are proving that the business model is profitable and more productive than conventional banking models.

Can Stablecoins Coexist With CBDC and Tokenized Deposits (TDs)?

In our view, it is a key objective of policy and design to ensure these forms of money are complementary. With the right technical properties, risk mitigants, and regulatory frameworks, there may even be an argument that they will all become necessary. Each format offers unique attributes that can together reinforce national financial stability, capital efficiency, and innovation. Much like their analogous counterparts in today’s monetary model—central bank banknotes, commercial bank deposits, and non-bank e-money—a tripartite architecture of CBDCs, tokenized deposits, and stablecoins could similarly serve as the backbone of the digital economy.