In a recent report, Citigroup Wealth stated that the adoption and growth of stablecoins could 'consolidate the long-term global dominance of the US dollar,' which also challenges the claim that Bitcoin will end the dominance of fiat currency.
Stablecoin trading volume accounts for over 80% of cryptocurrency transactions, and clearer regulation is expected to enhance its attractiveness.
According to a report by The Block, Citigroup Wealth strategists believe that stablecoins not only have the potential to strengthen the dollar's dominance but also challenge the notion that Bitcoin will one day end the dollar's supremacy.
Initially, cryptocurrencies like Bitcoin were seen as competitors to central bank-issued currencies. In fact, some believe Bitcoin could end the dominance of the US dollar. However, Citigroup wrote in a new report that stablecoins, which account for more than four-fifths of cryptocurrency trading volume, are challenging this notion.
Because the vast majority of stablecoins are pegged to the dollar, and issuers retain dollars and US Treasury bonds as reserves. If the US government takes further steps to legalize stablecoins, it could solidify the dollar's dominance.
Clearer regulation may further enhance the appeal of stablecoins. The demand from stablecoin issuers for US Treasury bonds may increase compared to the current purchase volume of about 1%. Therefore, this cryptocurrency will not usurp the dollar's position, but rather make it easier for the world to access dollars and solidify the long-standing global dominance of the dollar.
Stablecoin trading volume surpasses Visa.
Stablecoin trading volume has also reached a historical high, with transaction amounts reaching $5.5 trillion in the first quarter of 2024. In comparison, Visa's transaction volume is about $3.9 trillion.
In response to this challenge, Visa, PayPal, and other traditional players are also adjusting by offering their own stablecoins or settling transactions with currencies from other companies.
(PayPal successfully uses PYUSD stablecoin for instant commercial payments)
(Visa provides banking services for stablecoin issuance, connecting to the future tokenized asset market)
According to CoinGecko data, the total market capitalization of stablecoins has reached a historical high of over $200 billion, growing 13% over the past month. Among them, USDT continues to hold the top position with a market cap of $138.6 billion, USDC has a market cap of $41.5 billion, and in third place is the rapidly rising USDe, whose market cap doubled from $2.5 billion at the beginning of October to $5.6 billion.
(Stablecoin market capitalization exceeds $200 billion, reaching a new high, with USDe jumping to third place)
This article Citigroup: Stablecoins may strengthen the dollar, and Bitcoin cannot end the dollar's dominance first appeared in Chain News ABMedia.
