Coinbase has launched an advertising campaign aimed at US voters today, with the goal of promoting cryptocurrency as a cheaper way to send money abroad. Coinbase’s chief policy officer pointed out that the ad hopes to remind voters and potential clients that using cryptocurrency can facilitate overseas transactions at a lower cost and more conveniently. Many families believe that the traditional financial system is not suitable for them, and cryptocurrency is gradually becoming a topic of discussion within households. Products such as USDC transfers and Coinbase Wallet are popular because they offer cheaper and more convenient options. This reflects the core of economic freedom and is also a reason why many people are turning to cryptocurrency.
This week, there have been many dynamic developments in the stablecoin sector, and Aiying has keenly observed the rapid pace of progress in this area. Below are some observations and data from Aiying’s recent two-week market analysis of stablecoins:
First, there has been a sharp increase in stablecoin transfer volume. Data from Token Terminal shows that over the past four years, monthly stablecoin transfer volume has increased tenfold, from $100 billion per month to $1 trillion in June 2024. On June 20, 2024, the total trading volume of the entire cryptocurrency market was $743.91 billion, with stablecoins accounting for 60.13%, or approximately $447.1 billion. Among them, USDT (Tether) is the most widely used, with a market value of $112.24 billion, accounting for 69.5% of the total value of all stablecoins. On the same day, USDT’s trading volume reached $34.84 billion, accounting for 46.85% of the total daily trading volume.
Second, major investment banks and financial institutions are also driving the adoption of stablecoins. Some financial giants have started tokenizing assets, indicating their optimism about the future of stablecoins. For example, BlackRock, the world’s largest asset management company with $10.5 trillion in assets under management, launched the BUIDL fund, a tokenized fund primarily invested in US government bonds, with a current size exceeding $460 million, making it one of the largest tokenized funds on public blockchains.
At the same time, Franklin Templeton’s FOBXX fund has also been tokenized, managing assets worth $3.46 billion. Recently, they announced the use of USDC stablecoin as the fund’s entry and exit channel, allowing investors to buy or sell fund shares with USDC around the clock.
In addition, fintech companies are actively promoting stablecoin payments. PayPal has introduced its own stablecoin, PayPal USD (PYUSD), with a market value exceeding $400 million and already being used on multiple public blockchains. PYUSD has been integrated into the decentralized finance (DeFi) ecosystem, including decentralized exchanges and lending platforms. PayPal stated that PYUSD aims to reduce friction in virtual payments, facilitate rapid value transfer, and support personal remittances and international payments.
As one of the world’s largest payment networks, Visa is also experimenting with stablecoin payments. Cuy Sheffield, Visa’s head of crypto, stated that they are using stablecoins such as USDC, as well as global blockchain networks like Solana and Ethereum, to improve the speed of cross-border settlements. Visa is also conducting real-time pilot programs to enable Visa card payments to be settled with USDC.
Furthermore, in less developed financial regions, there is a practical application of stablecoins. For example, in Nigeria, there is a high demand for USDT, especially in areas with less developed banking services. Residents in northern states such as Katsina and Borno have found USDT to be more stable and reliable than the local currency. Bitcoin and Dogecoin are also popular in different regions. For example, in the financially developed region of the Delta, Bitcoin is highly popular. In conservative northern states, Dogecoin has gained popularity due to its low transaction fees and ease of use.
In Argentina, Paxos International has introduced the interest-bearing stablecoin USDL. Due to economic instability and severe inflation, there is a high demand for stablecoins in Argentina. USDL allows Argentinian consumers to earn overnight interest, with holders able to earn overnight interest by holding short-term, low-risk assets such as US government securities and cash equivalents, managed by the Abu Dhabi Global Market (ADGM) Financial Services Regulatory Authority (FSRA) in accordance with security protection and custody requirements. This reserve structure is similar to other Paxos-issued 1:1-pegged USD stablecoins. USDL is issued on Ethereum in a permissionless manner, and interest is paid to token holders programmatically on a daily basis.
Globally, regulation is becoming increasingly distinct and clear. The European Union’s Markets in Crypto Assets (MiCA) regulation is set to come into effect, marking an important step in comprehensive regulation of stablecoins and other crypto assets. The MiCA regulation aims to ensure transparency and stability in the cryptocurrency market, requiring issuers to provide detailed disclosure and meet strict reserve and capital requirements. These new regulations will have a significant impact on the issuance and use of stablecoins, especially in ensuring the safety of user funds and market stability.
Additionally, the Hong Kong government is continuously refining its stablecoin regulatory framework to adapt to the rapidly changing market environment. The Hong Kong Monetary Authority (HKMA) has launched a sandbox program, allowing companies interested in issuing stablecoins in Hong Kong to test their operational plans in a controlled environment. This sandbox program not only helps companies understand and comply with Hong Kong’s regulatory requirements but also promotes communication and cooperation between regulatory authorities and businesses to ensure the healthy development of the stablecoin market.
In the United States and the European Union, new stablecoin regulatory policies are being actively formulated and implemented to ensure the healthy development of this market. The U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) are conducting rigorous reviews of stablecoin issuance and trading to prevent market manipulation and protect investor interests. This week in the United States, a consumer protection organization launched a multi-million-dollar advertising campaign focusing on the commercial practices of Tether (USDT). This public call to attention and warning has not only led to scrutiny of Tether and other stablecoins but has also prompted the introduction of stricter regulatory measures to protect consumers from potential financial risks.
As more countries introduce stablecoin regulatory policies, this will further drive the normalization and maturation of the stablecoin market, attracting more institutional and individual users. Stablecoins are not only popular among individual users but also play an important role in enterprise payments, cross-border remittances, and decentralized finance (DeFi) applications. Enterprises can use stablecoins for faster and lower-cost international payments, while DeFi platforms provide financial services such as lending and trading through stablecoins. Stablecoins are not only widely used in developed countries but have also rapidly gained popularity in developing countries, providing users in these countries with tools to combat inflation and economic instability.
Jeremy Allaire, the CEO of Circle, predicts that stablecoins may account for 10% of the global economy’s currency in the next decade. Although this prediction may sound exaggerated, he pointed out some factors that could lead to the rapid proliferation of stablecoins in the next ten years.
In a post on June 19, Allaire pointed out that some of the world’s largest payment companies are using this technology and exploring how to expand its use, as the advantages of public blockchains and stablecoins become increasingly apparent. He stated that the market potential is huge and could reach a scale of “tens of billions.” By using digital dollars on the blockchain, it can provide banking services to those without bank accounts, reduce remittance costs, and facilitate seamless cross-border trade. He also noted that stablecoins are becoming an increasingly popular form of digital currency, and by the end of 2025, stablecoins will constitute a “growing part” of the global $100 trillion electronic currency market.
