TL;DR
- Analysts from Standard Chartered and Zodia Markets project that stablecoins could reach up to 10% of M2 and FX transactions in the U.S.
- Although they currently represent only 1% of these transactions, proper regulation, especially under the Trump administration, could drive their adoption.
- Stablecoins are increasingly being used in cross-border payments, remittances, and trade settlement.
Analysts from Standard Chartered and Zodia Markets have projected strong growth in the use of stablecoins in the United States, suggesting that they could represent up to 10% of M2 and foreign exchange (FX) transactions in the future.
Currently, stablecoins account for approximately 1% of both types of transactions, but experts believe this percentage could increase as the sector gains more legitimacy and a proper regulatory framework is established.
The Impact of Regulation on Stablecoin Adoption
The key factor for this growth is regulation. While during the Joe Biden administration little progress was made in creating clear regulatory guidelines, analysts believe that the Donald Trump administration could take more decisive steps in this regard, accelerating its growth and their integration into traditional financial systems. Regulation would allow these assets to gain greater acceptance among users, including banks and financial institutions.
The Limitations of SWIFT and Traditional Banking Systems
The report also critiques the current global financial infrastructure, highlighting the limitations of the traditional banking system and SWIFT, particularly due to the opaque fees applied in international transactions. These fees, based on transaction volume or membership discounts, hinder transparency and accessibility for many users, leading stablecoins to emerge as a more efficient and cost-effective alternative for global transactions.
In terms of applications, stablecoins are increasingly gaining ground, not only as trading tools but also in areas such as cross-border payments, remittances, trade settlement, and payroll payments. Additionally, a recent report by YouGov highlights their growing popularity in emerging markets such as Brazil, Turkey, Nigeria, India, and Indonesia, where users particularly value the ability to directly hold tokenized currencies, such as the U.S. dollar, without relying on banks that are often unreliable or inaccessible.
The stablecoin market has reached a historic market capitalization of $190 billion, surpassing the previous record of $188 billion. Fiat-backed stablecoins, such as USDT and USDC, dominate the market. USDT now ranks as the third-largest digital asset, only behind Bitcoin and Ethereum