Written by: Aiying
Coinbase today launched an ad campaign targeting U.S. voters that promotes cryptocurrency as a cheaper way to remit money. Coinbase's chief policy officer noted that the ad hopes to remind voters and potential customers that using cryptocurrency can make overseas transactions cheaper and more convenient. Many families believe that the traditional financial system is not suitable for them, and cryptocurrency is gradually becoming a topic of discussion in the family. Products such as USDC transfers and Coinbase Wallet are popular because they provide cheaper and more convenient options. This reflects the core of economic freedom and is why many people turn to cryptocurrency.
Video link: https://mp.weixin.qq.com/s/VA0wdNh4aUJ8p2CaFnaTAA
There have been a lot of news about stablecoins this week. Aiying can also deeply feel that the advancement of this field is proceeding in a devastating way. The following are some recent phenomena and data observations of the stablecoin market in the past two weeks by Aiying:
1. Stablecoin transfer volume surges
From the data of Token Terminal, we can see that in the past four years, the monthly stablecoin transfer volume has increased tenfold, from $100 billion per month to $1 trillion. On June 20, 2024, the total transaction volume of the entire cryptocurrency market was $74.391 billion, and stablecoins accounted for 60.13% of it, about $44.71 billion. Among them, USDT (Tether) is the most used, with a market value of $112.24 billion, accounting for 69.5% of the total value of all stablecoins. On June 20, USDT's transaction volume reached $34.84 billion, accounting for 46.85% of the total transaction volume on that day.
2. Big investment banks and financial institutions are also promoting stablecoins
1. Major investment banks join the asset management
This week, some financial giants began to tokenize assets, showing their optimism about the future of stablecoins. For example, BlackRock, the world's largest asset management company, manages $10.5 trillion in assets. They launched the BUIDL fund, a tokenized fund based on U.S. Treasury bonds, which currently has a scale of more than $460 million and is one of the largest tokenized funds on the public blockchain.
Meanwhile, Franklin Templeton has also tokenized its FOBXX fund, which manages $346 million in assets. Recently, they announced the use of the USDC stablecoin as an entry and exit channel for the fund, which means that investors can buy or sell fund shares with USDC around the clock.
2. Fintech companies promote stablecoin payments
Fintech companies are actively promoting stablecoin payments. PayPal has launched its own stablecoin, PayPal USD (PYUSD), which has a market value of more than $400 million and has been used on multiple public blockchains. PYUSD has been integrated into the decentralized finance (DeFi) ecosystem, including decentralized exchanges and lending platforms. PayPal said that PYUSD aims to reduce friction in virtual payments, facilitate rapid value transfer, and support personal remittances and international payments.
As one of the world's largest payment networks, Visa is also experimenting with stablecoin payments. Cuy Sheffield, head of Visa crypto, said they are using stablecoins such as USDC and global blockchain networks such as Solana and Ethereum to increase the speed of cross-border settlements. Visa is also conducting a live pilot project to enable Visa card payments to be settled with USDC.
2. Practical Application of Stablecoins in Financially Underdeveloped Regions
1. Nigeria: The demand for USDT is huge
Nigeria is a country that is particularly interested in cryptocurrencies, especially in areas where banking services are not well developed, and USDT (Tether) has become everyone's first choice.
USDT is widely used in Katsina and Borno states in northern Nigeria, where residents find USDT more stable and reliable than local currencies.
Bitcoin and Dogecoin are also popular in different regions. For example, in areas such as Delta State where financial services are well developed, Bitcoin is very popular. In the conservative northern state, Dogecoin has gained the favor of many users due to its low transaction fees and ease of use.
2. Argentina: Paxos International launches the yield-based stablecoin USDL
Argentina is another country with a high demand for stablecoins, mainly because of economic instability and severe inflation, and many people hope to find a more stable means of storing value.
Axos International launches USDL stablecoin, Argentine consumers can earn overnight returns, holders can earn overnight returns through short-term, low-risk U.S. government securities and cash equivalent assets, which are managed by the Financial Services Regulatory Authority (FSRA) of Abu Dhabi Global Market (ADGM) in accordance with security protection and custody requirements. This reserve structure is similar to other 1:1 backed USD stablecoins issued by Paxos. USDL is issued without permission on Ethereum and pays returns to token holders every day in a programmatic manner.
4. Global regulation is becoming increasingly fragmented
1. EU MiCA regulations are about to be implemented
The EU's Markets in Crypto-Assets Regulation (MiCA) is about to come into effect, which will be an important step in the comprehensive regulation of stablecoins and other crypto assets. For more details, please read "European MiCA Act 10,000-word Research Report: Comprehensive Interpretation of the Far-reaching Impact on the Web3 Industry, DeFi, Stablecoins and ICO Projects"
MiCA regulations aim to ensure transparency and stability in the cryptocurrency market, requiring issuers to provide detailed disclosures and meet strict reserve and capital requirements.
These new regulations will have a significant impact on the issuance and use of stablecoins, especially ensuring the security of users' funds and market stability.
2. Hong Kong’s regulatory framework and “sandbox” program
The Hong Kong government is continuously improving its stablecoin regulatory framework to adapt to the rapidly changing market environment.
The Hong Kong Monetary Authority (HKMA) has launched a “sandbox” program to allow companies interested in issuing stablecoins in Hong Kong to test their operational plans in a controlled environment.
This sandbox program not only helps companies understand and comply with Hong Kong’s regulatory requirements, but also promotes communication and cooperation between regulators and companies to ensure the healthy development of the stablecoin market.
3. US policy
Both the United States and the European Union are actively formulating and implementing new stablecoin regulatory policies to ensure the healthy development of this market.
The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are closely scrutinizing the issuance and trading of stablecoins to prevent market manipulation and protect investor interests.
This week in the United States, consumer protection groups launched a multimillion-dollar advertising campaign focused on Tether’s (USDT) business practices. Through television ads, billboards, and other publicity, the campaign alerted the public to the potential risks of Tether, especially its reserve audit issues. This public appeal and warning not only promoted scrutiny of Tether and other stablecoins, but also promoted the introduction of stricter regulatory measures to protect consumers from potential financial risks.
5. Future Trends
As more countries introduce stablecoin regulatory policies, this will further promote the standardization and maturity of the stablecoin market and attract more institutional and individual users. Stablecoins are not only popular among individual users, but also play an important role in corporate payments, cross-border remittances, and decentralized finance (DeFi) applications. Companies can use stablecoins for faster and lower-cost international payments, while DeFi platforms provide financial services such as lending and trading through stablecoins. Not only are they widely used in developed countries, they have also gained rapid popularity in developing countries. Stablecoins provide users in these countries with tools to combat inflation and economic instability.
Circle boss Jeremy Allaire predicts that stablecoins could account for 10% of the global economy’s currency in the next decade or so. While this prediction sounds a bit exaggerated, he mentioned some factors that could lead to the rapid popularity of stablecoins in the next decade or so.
Allaire noted in a June 19 post that some of the world’s largest payment companies are using the technology and exploring how to expand its use as the advantages of public blockchains and stablecoins become increasingly apparent.
He said the market has huge potential and could reach "billions". By using digital dollars on the blockchain, the promise of providing banking services to the unbanked, reducing remittance costs and enabling seamless cross-border trade can be fulfilled. In addition, he also pointed out that stablecoins are becoming an increasingly popular form of digital currency, and by the end of 2025, stablecoins will account for a "larger and larger part" of the global $100 trillion electronic currency market.
