Research and brokerage firm Bernstein said stablecoins are becoming "systemically important" and issuers are now the largest holders of U.S. Treasuries along with sovereign nations. After peaking in April 2022, the circulating supply of stablecoins is now back at an all-time high of approximately $180 billion.
Tether and Circle rank 18th among sovereigns in U.S. debt holdings
According to The Block, analysts at Bernstein said that blockchain-based stablecoins pegged to fiat currencies such as the U.S. dollar are reaching levels of systemic importance.
U.S. debt holdings by stablecoin issuers Tether and Circle rank 18th among sovereigns, behind only Saudi Arabia and ahead of South Korea.
The stablecoin business remains highly profitable, with Tether posting a net profit of $5.2 billion in the first half of 2024, as issuers retain high yields from U.S. Treasuries.
(The Federal Reserve is about to cut interest rates, and Tether’s quarterly revenue may be reduced by 200 million mg. How will the leading stablecoin respond?)
Stablecoins have become “killer currencies”
Bernstein analysts noted that monthly on-chain stablecoin payment volume has tripled to $1.4 trillion in the past 12 months, with stablecoins accounting for approximately 50% of all on-chain transaction volume.
Monthly active users hit a new high of around 22 million, and the total number of non-zero balance stablecoin wallets now stands at 120 million. And the use of stablecoins has been decoupled from cryptocurrencies, with stablecoins increasingly being used for non-cryptocurrency use cases.
A previous stablecoin research report issued by Visa also showed that stablecoins have become the “killer currency” in cryptocurrencies, especially in emerging markets.
(Visa launches stablecoin research report: On-chain transactions are dollarized, and more than 50% of them are settled by stablecoins)
Stablecoin supply hits record high
According to The Block’s data dashboard, the circulating supply of stablecoins peaked in 2022 and then declined with the bear market. The current circulating supply of stablecoins has returned to a historical high of nearly $180 billion.
Tether’s USDT remains the dominant stablecoin with a market cap of approximately $120 billion, followed by Circle’s UDSC with a market cap of approximately $35 billion.
New entrants continue to emerge in the stablecoin market. PYUSD, jointly issued by PayPal and Paxos, currently has a circulating volume of close to approximately US$1 billion. Ripple recently announced plans to issue a new stablecoin for cross-border payments. After obtaining a British banking license in July, financial technology company Revolut also said it would enter the stablecoin market in the near future.
Other drivers of stablecoin growth include providing international users with access to U.S. dollar savings, access to digital dollars outside the U.S., serving as the primary base currency for cryptocurrency trading and enabling users to earn on DeFi platforms, and providing the cheapest cross-border Payment abroad.
Non-crypto uses for stablecoins are growing
Bernstein analysts said that non-crypto uses of stablecoins are growing, with currency exchange, payment for goods or services, and cross-border transactions being the most popular uses.
According to its survey, young people under the age of 35 hold an increasing proportion of stablecoins in their assets. Among respondents aged 18 to 24 in emerging markets, 35% own 25% of their assets in stablecoins. coins, while the proportion for the 45-54 age group is 17%.
Analysts believe that the opportunity for higher returns is the most common reason why younger generations choose stablecoins over U.S. dollar bank accounts. Another reason is that stablecoins bring them more trust, more stable value, and fewer opportunities. Government intervention.
This article Bernstein: The market value of stablecoins has reached a new high and is becoming “systemically important”. It first appeared on Chain News ABMedia.
