Stablecoins are gaining traction in global finance, moving beyond their initial use in crypto exchanges. A recent report from Standard Chartered indicates that stablecoins are being utilized for various purposes similar to traditional finance, such as saving and transacting in U.S. dollars, as well as facilitating cross-border payments. The study highlights the shift in stablecoins’ dominant use case, emphasizing their increasing adoption for real-world applications.
One key driver behind this shift is the demand for faster and more accessible cross-border transactions. Traditional correspondent banking systems have limitations, particularly in emerging markets where access is declining. Stablecoins offer a solution by enabling the transfer of digital dollar assets at speeds comparable to email, circumventing the slow and unreliable traditional systems.
The report reveals that stablecoins are now being utilized for saving in USD terms, transacting in USD, and conducting cross-border USD-to-USD transactions. A survey mentioned in the study found that in countries like Brazil, Turkey, Nigeria, India, and Indonesia, stablecoins are being used for currency substitution, paying for goods and services, and cross-border payments. While U.S. dollar-pegged stablecoins dominate the market, there is growing interest in non-USD stablecoins, suggesting a potentially more diverse stablecoin ecosystem in the future.
Despite the current market cap of stablecoins being relatively small at $163 billion compared to overall financial markets, there is substantial room for growth. The potential for expansion is closely tied to regulatory developments. Standard Chartered anticipates continued growth in stablecoin adoption, particularly if U.S. stablecoin regulation is passed, which seems likely under the current administration. The report sees stablecoins as a “first killer app” in digital assets, providing an alternative for the unbanked and offering efficiencies in cross-border transactions that traditional systems struggle to match.
Looking ahead, the future of stablecoins appears promising, with opportunities for increased adoption in developed and emerging markets alike. The combination of technological advancements and regulatory support may position stablecoins as a significant component of the global financial infrastructure. Standard Chartered, which has shown optimism towards Bitcoin and the broader crypto market, has recommended investors to purchase Bitcoin below $60,000, regardless of the recent election outcome. With Bitcoin’s price surging towards $100,000, investors who followed this advice have seen substantial returns in a short period.
