- Dollar-pegged cryptocurrencies hit a milestone, DefiLlama data shows.
- Landmark US legislation is driving optimism and volume in sector.
- Experts say sector's growth story is just beginning.
For all the excitement about Bitcoin’s latest surge, the sleeper story in crypto this week is the steady march of stablecoins toward mainstream adoption.
The global stablecoin supply just blew past $237 billion, a record high, according to data from DefiLlama.
In the last week alone, almost $2.5 billion in new stablecoins flooded the market.
And Tether and Circle, the duopoly at the heart of the sector, account for 85% of its total market value.
$3.7 trillion
The big story is that this asset class appears to be just getting started.
On Friday, Citigroup analysts predicted the stablecoin market is on course to reach $3.7 trillion in value in five years.
That would be almost a quarter bigger than the total crypto market as it stands today.
Moreover, banks and fintechs such as PayPal, Robinhood, and Revolut are already managing or developing their own stablecoins. Last October, PayPal’s director of market development said the company was using its stablecoin to pay invoices.
So, what’s driving the growth of these plain vanilla, largely dollar-pegged instruments?
The easy answer is Washington’s push to pass landmark legislation that would lay out a framework for stablecoin issuance and management.
Two bills are making steady progress on Capitol Hill and could land on President Dinald Trump’s desk for a signature by the third quarter.
Given that World Liberty Financial, the Trump family-backed crypto venture, plans to issue its own stablecoin it’s widely assumed the president will approve legislation.
Analysts at Standard Chartered predict the sector will hit $2 trillion by 2028 after the Genius Act, the Senate stablecoin bill, becomes law.
Yet there’s a deeper force at work, too: stablecoins are becoming increasingly deemed worthy of integration into the payments processing infrastructure.
New payment method
In February, Chris Colson, a payments researcher at the Federal Reserve Bank in Atlanta, told DL News that stablecoins are a “new payment method” poised for adoption.
By making it easier to send money from Point A to Point B, stablecoins provide an easy-to-understand value proposition for companies and consumers.
Moreover, the instruments, which are free of speculation that whipsaws Bitcoin and its ilk, are largely free of the scandal that has tainted memecoins.
Indeed, in the wild world of crypto, dollar-pegged cryptocurrencies have long been used as a haven for traders taking refuge from periodic downturns.
And that makes stablecoins more amenable to traditional financial institutions like banks.
Bryan Moynihan, the CEO of Bank of America, said in February that the bank was ready to jump into the stablecoin sector if and when legislation gets passed in Washington.
“If they make that legal, we’ll go into that business,” Moynihan said at an industry event.
Liam Kelly is a Berlin-based reporter for DL News. Got a tip? Email him at liam@dlnews.com.
