According to a recent research by alternative asset management Brevan Howard Digital, the stablecoin market will grow to have a supply worth billions of dollars and handle hundreds of trillions of dollars in transaction value over the coming years. Stablecoins like Tether (USDT) and USD Coin (USDC) are becoming increasingly popular, changing the financial landscape. This digital revolution will have an impact on both the unbanked and underbanked masses around the world.
According to Brevan Howard Digital, the rise of stablecoins will “increasingly provide financial services to the global unbanked and underbanked, provide an escape from high-inflation currencies, and ignite an explosion of innovation built upon these new global open-network money movement rails.” Peter Johnson, co-head of venture investments, and analyst Sai Nimmagadda emphasized the transformative potential of stablecoins.
Even industry titan PayPal has joined the fray with its PayPal USD (PYUSD) stablecoin, further validating the immense opportunity in this space. The implications of PayPal’s entry into the stablecoin arena are profound, potentially challenging the established global financial services sector.
Remarkably, stablecoins settled over $11 trillion on-chain in 2022, eclipsing the transaction volumes of giants like PayPal ($1.4 trillion) and nearly matching Visa ($11.6 trillion). These statistics underline stablecoins’ swift ascent as a global financial powerhouse.
Additionally, stablecoins accounted for 14% of the volume settled by ACH payments and over 1% of the volume settled by Fedwire, U.S. Federal Reserve banks’ settlement system. A specific kind of computerized bank-to-bank transfer used in the US is called an ACH payment. Fedwire is a central bank money settlement mechanism run by American Federal Reserve institutions.
Astonishingly, over 25 million blockchain addresses currently hold over $1 in stablecoins. If we were to draw a parallel with traditional finance, a U.S. bank boasting 25 million accounts would rank as the fifth largest by the number of accounts, underscoring stablecoins’ potential to provide global financial services to underserved customers.
One intriguing aspect highlighted by the report is the low correlation between stablecoin usage and crypto exchange volumes, suggesting that substantial stablecoin transactions are primarily intended for non-speculative purposes.
Furthermore, during the recent crypto market downturn, stablecoins displayed remarkable resilience. While the total crypto market cap plummeted by 57%, the total market capitalization of stablecoins only experienced a modest 24% decline, showcasing their stability even in tumultuous times.
Stablecoins become a force to be reckoned with as the world’s financial system continues to change, offering a virtual entryway to financial inclusion and innovation. The financial landscape as we know it is about to change as a result of the rise of these stable giants.