Stablecoins, a type of cryptocurrency pegged to a stable asset like the U.S. dollar, are gaining prominence within the global financial system. According to a recent report by Bernstein, these digital assets have become the 18th-largest holders of U.S. Treasuries, underscoring their growing significance.
After a decline in 2023, the supply of stablecoins has rebounded to an all-time high of $170 billion. This surge is accompanied by a threefold increase in monthly payment volume on-chain over the past year, reaching $1.4 trillion in July.
Bernstein analysts highlight the role of stablecoins in providing access to USD savings for international users. These digital assets are increasingly integrated into payment systems and fintech platforms, expanding their reach beyond the United States. Companies like PayPal, MercadoLibre, and Grab have embraced stablecoins for their payment solutions.
Cross-border payments are another area where stablecoins are making a significant impact. Bernstein notes that USD stablecoins on layer 2 blockchains offer the cheapest cross-border payment rails, with transaction fees as low as 1 cent for $1,000. This efficiency is attracting users seeking cost-effective and fast international transfers.
Beyond their utility as payment instruments, stablecoins are also serving as a store of value for many users outside the United States. Younger generations, particularly those aged 18-24 in emerging markets, are increasingly adopting stablecoins, with 20% of this demographic holding between 25% and 50% of their portfolios in these digital assets.
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As stablecoins continue to gain traction and become more deeply integrated into the financial system, their systemic importance is undeniable. Their role in facilitating cross-border payments, providing access to USD savings, and serving as a store of value positions them as a key player in the evolving digital economy.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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