Stablecoins are gaining systemic importance in the cryptocurrency industry. What this means: Bernstein experts’ version
Stablecoins are gradually reaching the level of systemic importance in the whole industry of digital assets, according to analysts of the brokerage company Bernstein. Still, the issuers of such tokens as Tether and Circle are now on the 18th place among holders of U.S. Treasury bonds along with sovereign states. According to analysts, USDT and USDC hold more than $125 billion worth of U.S. Treasury bonds. Therefore, tokens with a link to fiat money really deserve increased attention.
As a reminder, stablecoins are tokens in different blockchains tied to real world assets like the US dollar and other fiat currencies, as well as commodities like gold. They minimise the volatility that is inherent in popular full-fledged coins such as BTC, ETH and SOL.
They also provide a convenient means of storing and transferring value in the cryptosphere, which is especially relevant in the niche of decentralised finance (DeFi) and cryptocurrency exchanges. Stablecoins also offer stability, which is important not only for traders and users in the context of cryptocurrency price fluctuations, but also for residents of entire countries with troubled economies.
Tether CEO Paolo Ardoino
It is important to understand that top staples like USDT, USDC and other products are centralised. Accordingly, if the owner of a certain wallet commits a crime, information about which reaches the issuing company, it can easily add the specified address to the blacklist. Thus, the tokens will be frozen.
What is the secret to the success of stablecoins
Here’s a comment from the authors of a recent Bernstein client report cited by The Block.
Stablecoin companies’ businesses have remained highly profitable, and they retain the income from placing funds in U.S. Treasuries. For example, Tether has a net profit of $5.2 billion in the first half of 2024.
As we noted earlier, Tether also made $6.2 billion for the full year 2023. This allowed the giant to beat the profitability figure of the world's largest investment company, BlackRock, which received 5.5 billion. It is important to note that the number of employees of Tether is about 100 people and is less than the corresponding figure of BlackRock approximately 200 times.
Top holders of U.S. Treasury bonds
According to sources, the monthly volume of payments in stablecoins has tripled over the past 12 months to reach $1.4 trillion. Such coins account for about 50 per cent of all blockchain transactions.
It’s also worth noting the growth in the turnover rate of stablecoins – it determines how often transactions with the asset are carried out. In particular, Tether’s USDT went from 48 to 55.6 over the year, while Circle’s USDC score went from 17.7 to 25. Here is the corresponding graph from Kaiko representatives, which illustrates the increasing popularity of this token category.
Stablecoin turnover rate data in 2023 and 2024
The number of monthly active users has also reached new highs at 22 million units, while the total number of wallets with non-zero stablecoin balances now stands at 120 million.
However, “Stablecoin usage has decoupled from cryptocurrencies, and stackablecoins are increasingly being used for purposes outside of the market,” analysts said.
While staples activity previously peaked during the bear market of 2022, when crypto traders began withdrawing funds from their volatile investments, stackablecoin turnover is now back to all-time highs at nearly $180 billion.
USDT from Tether remains the dominant stablecoin with a capitalisation of around $120 billion. It is followed by Circle’s UDSC with a capitalisation of around $35 billion. Experts continue.
Tether’s integration with global offshore exchanges and the use of USDT for cross-border payments in markets outside the U.S. continue to be key drivers of adoption growth.
Total Stablecoin Supply
According to Bernstein, Efirium dominates the volume of stablcoin transactions as it accounts for about 45 per cent of total transfers. It is followed by blockchains Tron and Solana.
New entrants also continue to emerge in the stablcoin market. For example, the issuance volume of the PYUSD token, launched last year as part of a partnership between PayPal and Paxos, took the $1 billion level at the end of August.
The number of active addresses that interact with PayPal’s PYUSD steiblcoin
The day before, Ripple announced plans to launch a new steiblcoin for cross-border payments. Also on Wednesday, reports surfaced that fintech company Revolut is also set to enter the game with its new project. Here’s how the giant’s representatives commented on the news.
Cryptocurrency is an integral part of our philosophy of banking without borders. Our mission is very clear: to become the most reliable and affordable cryptoasset service provider.
Revolut platform logo card
Other factors contributing to the growth of the sphere include giving international users access to dollar savings, the spread of digital dollars outside of the US, the role of the main unit of account for crypto trading, and the ability to make money in decentralised finance with less risk due to minimal volatility.
Stablecoins continue to be one of the most popular instruments in digital assets. Still, they successfully replace dollars in some countries and allow traders to successfully lock in profits before bearish trends. Obviously, in the future, the level of acceptance of such assets will become higher and steibles themselves will more actively move beyond the niche of coins.
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