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Crypto Potato 2024-11-30 23:45:36

Stablecoins Remain 1% of US Money Supply, FX Market but Experts Predict 10x Growth

With a current market cap of less than $200 billion, stablecoins represent a tiny fraction of global financial transactions – just 1% of US money supply and foreign exchange operations. However, a joint report by Standard Chartered and Zodia Markets research suggests significant growth potential, with experts projecting expansion to 10% of the US money supply (M2) and foreign exchange (FX) transactions. Regulation Could Unlock Stablecoins’ Full Potential According to the report titled ‘Stablecoins: The First Killer App,’ the utility of stablecoins has evolved well beyond their original role in cryptocurrency trading. Initially used as a bridge asset for trading, stablecoins are increasingly employed in cross-border payments, payroll, trade settlements, and remittances. These applications demonstrate their ability to address inefficiencies in existing financial systems, such as high costs, delayed transaction times, and limited accessibility in underserved regions. By providing faster and cheaper transactions, stablecoins offer a compelling solution for international remittances and business operations, positioning themselves as a pivotal tool in modern finance. The analysis also highlighted the implications of stablecoin adoption for the broader financial ecosystem. At present, stablecoins’ total market capitalization is dwarfed by the $21 trillion US M2 and $2.1 trillion in daily FX spot transactions. However, achieving a 10% share could transform them into a dominant force in global finance, thereby reshaping the landscape of digital payments and settlements. Regulation is seen as the key to this transition. While previous US administrations have made little progress in establishing stablecoin-specific policies, the report suggests that a Trump-led government in 2025 might prioritize these efforts. In fact, this regulatory clarity is expected to unlock stablecoins’ full potential, enabling them to scale and diversify their use cases further. Stablecoin Adoption Soars in Emerging Markets Geographically, USD-backed stablecoins dominate the market, comprising 99.3% of current stablecoin market capitalization. Tether (USDT) leads with a 73% market share, followed by Circle’s USD Coin (USDC) at 21%. Meanwhile, Standard Chartered’s Thursday report cited a YouGov survey that found compelling use cases. Across five emerging markets – Brazil, Turkey, Nigeria, India, and Indonesia – it was observed that 69% of respondents use stablecoins for currency substitution, while 39% employ them for cross-border payments and goods and services transactions. The post Stablecoins Remain 1% of US Money Supply, FX Market but Experts Predict 10x Growth appeared first on CryptoPotato .

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