Stablecoin Will Expand Beyond Cryptocurrency Trading, Becoming A Part Of The Mainstream Economy

According to predictions from the global bank Citi, the stablecoin market could soon overshadow the entire cryptocurrency trading ecosystem that created it as regulations allow for the integration of fixed-value tokens into the mainstream economy. In addition to serving as a digital cash for the cryptocurrency trading community, stablecoins — digital tokens primarily pegged to the US dollar — are currently expanding into the fields of payments and remittances. According to a recent report from Citi Institute's Future Finance research group, in the next five years, they could replace a number of US currencies domestically and abroad as well as form part of the short-term liquidity held at banks. If profitable stablecoins can be issued, they may find a role in time deposits and retail money market funds. "We are considering the integration of stablecoins into what you call the mainstream economy," said Ronit Ghose, global director of Future of Finance at Citi Institute, in an interview. "For example, stablecoins could serve as cash for financial assets that are tokenized or for payments of small and medium enterprises and large corporations. The dollar, and to a lesser extent the euro, has this type of international currency status. Stablecoins allow people around the world to hold dollars or euros in an easy, low-cost way." The current market size of stablecoins is around 240 billion dollars, led by Tether's 145 billion dollars USDT and Circle's 60 billion dollars USDC. According to Citi's predictions, stablecoins will increase to 1.6 trillion dollars by 2030, provided there is regulatory support and organizational integration. In the bank's more optimistic scenario, the market could soar to 3.7 trillion dollars. ( The current global cryptocurrency market capitalization is around 3.45 trillion dollars. ) Major cryptocurrency companies like Fireblocks, a platform for managing and moving digital assets, have noted a shift in the use of stablecoins from payment and on/off trading tools to payments. "Payment companies are leveraging stablecoins for various pure payment streams, including cross-border remittances, remittances, merchant payments, and other transactions," said CEO Michael Shaulov in an email. "Payment companies account for 11% of our total customers, but they represent 16% of the total stablecoin transactions with a Q/Q growth in volume of over 30%. It is very likely that this growth will continue, and they will account for 50% of the stablecoin volume within the next 12 months." In the past 90 days, the combined volume of USDT and USDC on Fireblocks is $517 billion, accounting for about 44% of the total volume, a figure that has doubled in recent years. Of that, payment companies have generated $82 billion, a 38.2% quarter-over-quarter increase, Fireblocks reported. Previously, Citi's Future Finance team considered the potential of central bank digital currencies (CBDC), which are often viewed by the cryptocurrency community as opposed to the innovation of laissez-faire liberalism, a viewpoint also supported by President Donald Trump. According to Citi's Ghose, the development of stablecoins raises many questions: If the United States supports stablecoins, will Europe do the same? Or will Europe prefer CBDCs instead? Will CBDCs develop in the rest of the world? How will token deposits and tokenized deposits occur? Ghose stated that regardless of the context, banks are likely to leverage all of the above. By definition, all banks conduct interbank payments, which is significant for both wholesale CBDCs and retail CBDCs, he said. "Depending on the country, there may be stablecoin options or there may be CBDC options," Ghose said. "From a cryptocurrency perspective, it's like Star Wars, where CBDC is the evil Empire, in contrast to the cryptocurrency people, who see themselves as Luke Skywalker."