Visa Report: Over 90% of Stablecoin Transactions Not from Genuine Users

According to a report by Bloomberg, a study by Visa revealed that out of the approximately $2.2 trillion in stablecoin transactions in April, only $149 billion came from "organic payment activity." This indicates that over 90% of stablecoin transactions are not from real users, but from bots and other transactions related to inflationary behavior.

Nearly 90% of Stablecoin Trading Not From Real Users

According to a research report by Visa and Allium Labs, out of the approximately $2.2 trillion in stablecoin trading volume in April, only $149 billion came from "organic payment activities." This indicates that over 90% of stablecoin trading is not from real users but rather initiated by bots and large traders.

Tracking the "real" value of cryptocurrency activities using blockchain data has always been a challenge. Data provider Glassnode estimates that during the peak of the 2021 bull market, the record $3 trillion total market capitalization allocated to digital tokens actually only amounted to around $875 billion.

For stablecoins, transactions can often be double-counted depending on the platforms where users move funds. Cuy Sheffield, the head of cryptocurrency at Visa, explained that, for example, converting $100 USDC on a decentralized exchange like Uniswap to PayPal's PYUSD would result in a total stablecoin trading volume of $200 recorded on the chain.

Development of Stablecoins as Payment Tools Still in Early Stages

Visa processed over $12 trillion worth of transactions last year, and if stablecoins become a widely accepted form of payment, the company could face losses.

This report challenges the views of stablecoin supporters, who believe that stablecoins pegged to assets like the US dollar have the potential to revolutionize the $150 trillion payment industry. Financial technology giants like PayPal and Stripe have entered the stablecoin arena.

Analysts at Bernstein predicted last year that by 2028, the total value of all circulating stablecoins could reach $2.8 trillion. This would represent an almost 18-fold increase from the current combined circulation. Due to the instantaneous and nearly cost-free nature of transactions using such tokens, many in the crypto industry believe they will disrupt traditional payment industries.

PayPal launched the PYUSD stablecoin last year, seeking to enable instant and low-cost transfers within its broader payment infrastructure. Stripe announced in April that it allows merchants on its platform to accept stablecoins for online transactions.

Pranav Sood, General Manager for Europe, the Middle East, and Africa at payment platform Airwallex, commented on these developments:

This indicates that the development of stablecoins as payment tools is still in a very early stage. It's not to say they don't have long-term potential, but the focus in the short to medium term is on ensuring that existing technology operates better, as many still find the technology not very user-friendly.