How large the cryptocurrency stablecoin sphere will become: Standard Chartered’s prediction
Stablecoin is becoming increasingly popular – and that includes outside the cryptocurrency industry. However, it still has a long way to go to reach its growth ceiling: according to analysts at Standard Chartered and Zodia Markets, the transaction volume of all stablecoins will reach 10 per cent of the M2 money supply in the future. This is a key indicator of the total money supply in a country’s economy, which includes all money in circulation and other assets convertible into cash. So the prospects of popularising such tokens are huge.
Cryptocurrency enthusiasts often refer to stablecoins as the most successful use case of digital assets, the usefulness of which cannot be disputed.
Firstly, tokens linked to fiat currencies allow access to dollars in countries where doing so in the usual way is difficult or even impossible. In this way, people can preserve their own savings and not lose money to inflation.
Tether CEO Paolo Ardoino
Secondly, steibles allow to insure against confiscation of funds in states where this may be relevant. Also, we can’t forget the collapse of banks in the US in the spring of 2023, which also created a lot of problems for ordinary people.
What will happen to cryptocurrencies in the future
Jeff Kendrick, head of digital assets at Standard Chartered, commented on the results of the study. Here is his comment on the matter, as quoted by The Block.
Currently, the realm of stablecoins is equivalent to only 1 per cent of M2 money supply transactions in the US and 1 per cent of currency transactions. However, as the sector becomes legitimised, it is possible that this share could grow to as much as 10 per cent for each metric.
Top Stablecoins by capitalisation
According to analysts, the main factor in favour of the industry’s growth will be the development of new methods of regulating steiblcoins in the United States. Still, during Joe Biden’s presidency, three major bills were introduced to create a regulatory framework for banks to issue steiblcoins, but little progress has been made.
A new administration led by Donald Trump could change this situation. Plus, the renewed Congress will have a majority of Republicans, who have historically been better on digital assets compared to Democrats.
Dynamics of the M2 money supply in the US
Experts also drew attention to the limitations of the existing global financial infrastructure. The banking system and SWIFT, which have remained largely unchanged since their introduction in the early 1990s, charge fees based on membership, transaction volume and discounts. Settlement is often regulated on a price-time basis, which is opaque to many customers.
The use of stablecoins can achieve significant savings in this area, experts say. However, they are based on transparent blockchains like Efirium and Solana, which makes it possible to monitor what is happening much more widely.
In addition, these assets are increasingly being used not only as a trading tool, but also as a real way to preserve one’s savings from inflation. This can be clearly seen in the YouGov survey data, according to which stablecoins are gaining momentum in emerging markets. This is especially true for Brazil, Turkey, Nigeria, India and Indonesia.
Stablecoin’s strengths and weaknesses
A survey of 500 adult respondents in each of these countries revealed several key points about the crypto’s growing popularity.
Specifically, shoppers of steblecoins value the ability to hold conventional currency in digital form – most notably the U.S. dollar. In addition, it is much easier to transfer funds to other countries by crypto, bypassing the restrictions of the banking system.
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The growth of crypto adoption in general is also easy to gauge from the actions of government bodies around the world. Earlier, the parliament of the Swiss canton of Bern passed a motion to study the prospects of Bitcoin mining. As part of what is happening, a report is expected to be compiled with a detailed study of the issue, Cointelegraph reported.
Although the cantonal government council as an executive body has already spoken out against the idea, industry supporters are still calling the initiative a victory. It was proposed by a 23-member all-party parliamentary group. The project won on a vote of 85 to 46.
Bitcoin value changes in 2024
The report will look at where exactly in the canton surplus electricity could be generated, possible co-operation with Swiss miners and how mining could improve the stability of the power grid.
The experts looked at the American state of Texas as a potential model for integrating mining into the canton’s energy policy. In this way, local authorities can attract mining companies and jobs to the region, promote renewable energy and stabilise the power grid.
Overall, this is not the only vote regarding the acceptance of Bitcoin and cryptocurrencies in general. On 10 December 2024, Microsoft's board of directors will consider investing in BTC. And while they have previously been advised to vote against the initiative, MicroStrategy co-founder Michael Saylor will try to change things with a presentation we described here.
MicroStrategy Executive Chairman Michael Saylor
Stables have already proven to be an extremely successful solution. And since adequate regulation of digital assets should come with the change of government in the US in 2025, the popularity of crypto among ordinary people will clearly increase. And fiat money-linked tokens, because of their convenience, will do the same.
Look for more interesting things in our crypto chat. In it, we talk about other topics that are shaping the current bullrun in digital assets.
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