Visa Releases Stablecoin Research Report: Over 50% of On-Chain Transactions Settled in Stablecoins

Recently, payment giant Visa, venture capital firm Castle Island, and Brevan Howard Digital, a global hedge fund subsidiary, released a joint research report stating that stablecoins have become the "killer currency" in the cryptocurrency space, especially in emerging markets.

Visa and Other Payment Giants Driving Stablecoin Technology Development

Global payment giants like Visa are actively adopting stablecoins and exploring their potential in cross-border settlements and payment systems. Visa's founder, Dee Hock, stated: "In the future, currencies will be in digital form and will be globally transacted through electronic transmission."

Currently, Visa has launched payment solutions collaborating with over 1.3 million merchants globally, allowing users to transact using the stablecoin USDC. Additionally, Visa partnered with Allium Labs to create the Visa Onchain Analytics Dashboard, providing real-time data on stablecoins for enterprises and governments to conveniently track and analyze market dynamics.

Both Visa and PayPal CEOs have expressed that cryptocurrencies have significant potential.

Global Stablecoin Trading Volume Reaches $2.6 Trillion, with a Supply of $192 Billion

Reports show that as of the first half of 2024, the global trading volume of stablecoins has reached $2.6 trillion, with over 20 million blockchain addresses conducting stablecoin transactions monthly. These digital assets, known for their fast settlements, high transparency, and being pegged to the US Dollar, are rapidly gaining popularity in global markets, especially in countries with high inflation like Argentina and Nigeria.

Data indicates that since 2017, the supply of stablecoins has rapidly increased, peaking at $192 billion in March 2022, before declining due to the collapse of the stablecoin Terra UST and the crypto market crisis.

By the end of 2023, with the approval of the US Bitcoin ETF, the supply of stablecoins rebounded. Recently, regulations passed in the EU, Singapore, Hong Kong, and other regions have attracted issuers to introduce new types of stablecoins, such as Ethena's USDe, a synthetic USD token with a market value exceeding $3 billion, generating profits through arbitrage trading between Bitcoin and Ethereum futures and spot markets.

The report points out that stablecoins offer a new value model, allowing users to earn through blockchain. When emerging markets use stablecoins pegged to the US Dollar, it is essentially equivalent to indirectly purchasing US Treasury bonds, such as short-term Treasury bills. Note: However, mainstream stablecoins do not provide interest on government bonds. Despite some early failures in stablecoin experiments, Tether USDT was the first successful stablecoin, with its market share dropping to below 50% at one point but later recovering to around 70%.

Total Stablecoin Trading Volume Reaches $5.28 Trillion, Showing Steady Growth Beyond Settlement

Data shows that the total trading volume of stablecoins in 2023 was $3.7 trillion, reaching $2.62 trillion in the first half of 2024, totaling $5.28 trillion overall. Despite a decrease in cryptocurrency trading volumes from 2022 to 2023, the use of stablecoins continues to grow steadily, indicating an expanding user base beyond just transaction settlements. As of June 2024, the blockchains with the largest settlement volumes are Ethereum, Tron, Arbitrum, Coinbase's Base, Binance Smart Chain, and Solana.

Blockchain "Dollarization" Solidifies US Dollar's Position

Reports indicate a trend of dollarization on the blockchain. The volume of transactions settled in stablecoins significantly surpasses that of native crypto assets. While Bitcoin and Ethereum serve as major exchange mediums, stablecoins pegged to the US Dollar dominate the market. As of June 2024, stablecoins accounted for 50% of the settlement value on public chains, reaching a peak of 70% at one point.

The US Dollar remains the primary currency on the blockchain, with the Euro stablecoin supply at $617 million, representing approximately 0.38% of the market share. Other currencies like the Turkish Lira, Singapore Dollar, Japanese Yen, among others, have relatively smaller market shares.

Some countries like Nigeria are concerned about the potential risks to their local currency, the Naira. As stablecoins are almost entirely pegged to the US Dollar, it reflects the Dollar's status as a global reserve currency, with most countries having no restrictions on US Dollar stablecoins. Due to the Dollar's strength compared to other sovereign currencies, users prefer highly liquid USDT and USDC. Future regulations may impact the trend of stablecoin dollarization.

Diverse Uses of Stablecoins with Different Objectives in Various Countries

Data shows that in countries like Nigeria, India, Brazil, and Turkey, over 57% of users stated that their frequency of using stablecoins increased in the past year, with approximately 72% believing they will use them more in the future. Nigerians primarily use stablecoins to store US Dollars, affluent groups in India tend to hold stablecoins, Turkey focuses on returns, and Indonesia is interested in better currency exchange options.

This indicates the increasing popularity of stablecoins in these countries, especially for transactions and value preservation. The applications of stablecoins are no longer limited to cryptocurrency trading, with many users utilizing stablecoins for cross-border payments, commodity trading, and as alternatives to national currencies.

USDT Maintains Leadership, Users: Why Switch When You're Used to It

When asked if users would switch from Tether USDT to other stablecoins, most stated they continue to use USDT out of habit. For example, some said: "No specific reason, just used to it," "I'm used to using USDT, no reason to switch." Some users mentioned: "If there's a more common and cheaper stablecoin, I might switch, why not."

The popularity of Tether USDT lies in its high stability, broad usage, and consequent increase in trust. Thus, it has become the most popular stablecoin.

Ethereum Most Popular, Many Use Binance Exchange as Wallet

Ethereum, Tron, and Binance are the main blockchains for stablecoin trading, with Ethereum being the most popular blockchain in all regions, followed by Binance, Solana, and Tron, despite Ethereum's higher transaction fees. Additionally, 18% of users stated they transfer stablecoins within exchanges, with fewer using blockchains directly.

The most commonly used wallets are Trust Wallet, MetaMask, Coinbase Wallet, with over half of respondents using Binance Exchange as a wallet.

On-chain data shows a continuous increase in stablecoin usage, including monthly active addresses, total supply, and settlement amounts. The survey results refute the viewpoint that stablecoins are solely for crypto trading, with 47% of respondents using stablecoins to store US Dollars, 43% for currency exchange, and 39% for returns. The most common non-crypto uses include currency substitutes (69%), payment for goods and services (39%), and cross-border payments (39%).

99% of stablecoins are pegged to the US Dollar, becoming a crucial tool for replacing US banks in many emerging markets.

The Future Development of Stablecoins in Global Markets

In the future, stablecoins are expected to play a key role in more emerging markets, especially in cross-border payments, financial inclusion, and global fund flow management. With technological advancements and infrastructure development, stablecoins will provide more users with opportunities to access the US Dollar and other fiat currencies, adding new momentum to the global economy.

As digital payment technologies advance, traditional payment giants like Visa and PayPal are gradually entering the stablecoin market with USDC, USDT, and PYUSD. Visa solidifies its market position by supporting USDC in cross-border settlement solutions, USDC's transparency and compliance making it popular in cross-border payments; USDT maintains its dominant position in emerging markets due to its strong liquidity. PayPal's PyUSD further enhances its competitiveness in the digital payment market.

In the future, competition between traditional payment companies and stablecoins will revolve around payments, ecosystems, and financial inclusion. The ability to dominate the stablecoin market based on user needs, regulatory compliance, and technological innovation will determine who leads the stablecoin market, further driving innovation in the global payment market. Who will take the lead remains to be seen, so stay tuned!

Future Prospects? Stablecoin Market Cap Hits Two-Year High, PYUSD Market Cap Triples in a Single Month!

Apple Opens NFC Usage Rights, Circle CEO Delighted: USDC Contactless Payments Coming Soon