Stablecoins are extremely important in today’s crypto economy, and despite the recent drop in the broader market, stablecoin volumes continue to dominate most exchanges.
$7 Trillion In 2022
According to Coin Metrics data, on-chain stablecoin settlements surpassed $7 trillion in 2022 and are expected to top $8 trillion by the end of the year. While Visa, the largest card network, processes $12 trillion per year.
According to Peter Johnson, co-head of the venture at Brevan Howard Digital, stablecoin settlements have already surpassed Mastercard and American Express. Furthermore, he predicted that by 2023, on-chain stablecoin volumes would outnumber Visa transaction volumes.
He also stated that the volume of stablecoins would not only surpass Visa, but would most likely surpass the total volume of all four major card networks (Visa, Mastercard, AmEx, and Discover).
Johnson added that these on-chain stablecoin volumes do not include trading volumes on centralized exchanges, which account for a sizable portion of their own.
Credit card vs Stablecoin Settlements
While the comparison clearly shows a significant increase in stablecoin usage, many users pointed out that the comparison between the two entities is invalid because they are two separate entities.
There is a difference between credit card volumes and stablecoin settlements. Credit card transactions are typically associated with consumer spending, whereas fiat-pegged crypto assets are mostly associated with cryptocurrency trading and decentralized finance.
Regulations to Spur Stablecoin Adoption
A key barrier for stablecoins to be actively used by consumers in their daily lives, just like Visa and Mastercard, is regulations. Republican Senator Pat Toomey, who is retiring from the United States Congress at the end of this term, hopes to change that with his stablecoin bill. The bill proposes allowing non-state and non-bank institutions to issue stablecoins if they obtain a federal license created and issued by the United States Office of the Comptroller of the Currency (OCC) and are backed up by “high-quality liquid assets.”
Stablecoins currently account for approximately 16.5% of total market capitalization. According to CoinGecko, the total value of all stablecoins is around $140 billion. Tether-issued Tether currently dominates the stablecoin market with a total supply of 66.3 billion USDT, followed by Circle’s USDC with a market supply of 44.3 billion USD Coin (UDSC).
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