Research and brokerage firm Bernstein highlights that stablecoins are achieving "systemic importance" in the global financial ecosystem. Stablecoin issuers now rank among the largest holders of U.S. Treasury bonds, alongside sovereign nations. After peaking in April 2022, stablecoin circulation has rebounded to approximately $180 billion, matching previous highs.
Tether and Circle Rank 18th Among Sovereign U.S. Treasury Holders
Bernstein analysts note that blockchain-based stablecoins pegged to fiat currencies like the USD are reaching levels of systemic relevance.
Key insights:
- Tether (USDT) and Circle (USDC) collectively hold U.S. Treasuries comparable to the 18th-largest sovereign nation, surpassing South Korea and trailing Saudi Arabia.
- High yields from U.S. Treasuries keep stablecoin profitability robust. Tether reported $5.2 billion in net profits during H1 2024.
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Stablecoins Emerge as the "Killer App" of Crypto
Bernstein’s analysis reveals:
- Monthly on-chain stablecoin payments tripled YoY to $1.4 trillion, accounting for 50% of all on-chain transactions.
- Active users hit 22 million, with 120 million wallets holding non-zero balances.
- Usage increasingly decouples from crypto volatility, expanding into real-world applications like remittances and e-commerce.
Visa’s research confirms stablecoins’ dominance in emerging markets as a primary settlement tool for dollar-denominated transactions.
Market Cap Returns to All-Time Highs
The Block’s data dashboard shows:
- Total stablecoin supply has reclaimed its $180 billion peak after a bear-market dip.
- USDT leads with a **$120 billion** market cap, followed by **USDC** ($35 billion).
- New entrants like PayPal’s PYUSD ($1B circulation) and upcoming offerings from Ripple and Revolut signal intensifying competition.
Drivers of growth include:
- Dollarized savings for unbanked populations.
- Primary base currency for crypto trading.
- Low-cost cross-border payments.
Expanding Non-Crypto Use Cases
Stablecoins are gaining traction beyond crypto:
- Top uses: Currency exchanges, merchant payments, cross-border transfers.
- Demographics: 35% of surveyed 18–24-year-olds in emerging markets hold ≥25% of assets in stablecoins, versus 17% of 45–54-year-olds.
- Motivations: Higher yields, trust in blockchain transparency, and resistance to inflationary local currencies.
👉 Explore Revolut’s upcoming stablecoin initiatives
FAQ
Q1: Why are stablecoins considered systemically important?
A1: Their massive Treasury holdings and role in global payments infrastructure mirror traditional financial instruments’ impact.
Q2: What risks do stablecoin users face?
A2: Regulatory scrutiny, reserve mismanagement, and counterparty risks are primary concerns.
Q3: How do stablecoins achieve higher yields than banks?
A3: Issuers earn interest from underlying assets (e.g., U.S. Treasuries), passing profits to users via staking or appreciation.
Note: Cryptocurrency investments involve high risk. Assess your risk tolerance before participating.