With a current market capitalization of less than $200 billion, stablecoins represent a tiny fraction of global financial transactions – just 1% of the U.S. money supply and foreign exchange transactions.
However, a joint report from Standard Chartered and Zodia Markets Research suggests significant growth potential, with experts forecasting a 10% expansion in the US money supply (M2) and foreign exchange (FX) transactions.
Regulation could unlock the full potential of stablecoins
According to the report titled “Stablecoins: The First Killer App,” the utility of stablecoins has evolved far beyond their initial role in cryptocurrency trading. Initially used as a bridging asset for trading, stablecoins are increasingly used in cross-border payments, payroll, trade settlements and remittances.
These applications demonstrate their ability to address inefficiencies in existing financial systems, such as high costs, delayed transaction times, and limited accessibility in underserved regions. By enabling faster and cheaper transactions, stablecoins offer an attractive solution for international remittances and commercial operations, positioning themselves as an essential tool of modern finance.
The analysis also highlighted the implications of stablecoin adoption for the broader financial ecosystem. Currently, the total market cap of stablecoins is dwarfed by the $21 trillion US M2 and $2.1 trillion in daily spot transactions. However, reaching a 10% share could transform them into a dominant force in global finance, reshaping the landscape of digital payments and settlements.
Regulation is seen as key to this transition. Although previous US administrations have made little progress in establishing policies specific to stablecoins, the report suggests that a Trump-led government in 2025 could prioritize these efforts. In fact, this regulatory clarity should unlock the full potential of stablecoins, allowing them to evolve and further diversify their use cases.
Stablecoin adoption soars in emerging markets
Geographically, dollar-backed stablecoins dominate the market, accounting for 99.3% of the current stablecoin market capitalization. Tether (USDT) leads with a 73% market share, followed by Circle’s USD Coin (USDC) with 21%.
Meanwhile, Standard Chartered’s report on Thursday cited a YouGov survey that revealed compelling use cases. Across five emerging markets – Brazil, Turkey, Nigeria, India and Indonesia – it was observed that 69% of respondents use stablecoins to replace currency, while 39% employ them for cross-border payments and transactions of goods and services.
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