- The buzz around stablecoins is reaching a fever pitch.
- The market is expected to hit $500 billion in just a few months.
- But the success also brings risk.
A version of this article appeared in our The Roundup newsletter on September 26. Sign up here.
Hey all, Eric here!
Stablecoins are about to go gangbusters.
Having just crossed the $295 billion mark, the global stablecoin market is just months away from breaking through the $500 billion barrier.
That’s according to Colin Butler, global head of financing at stablecoin investment firm Mega Matrix.
Based on the market’s average 12% three-month growth, he told DL News it will hit $500 billion “sometime in 2026.”
And momentum will only build after that.
Crypto exchange Coinbase forecasts that the market will reach $1 trillion by 2028. Standard Chartered puts it at $2 trillion by 2029. And Citi expects it to clear the $4 trillion mark by 2030.
Add to that the fact that leading stablecoin issuer Tether is reportedly in talks to raise $20 billion at a $500 billion valuation — putting it in the rarefied ranks of tech giants like OpenAI and SpaceX — and the buzz around stablecoins becomes overwhelming.
A combination of events is fuelling that bullishness.
Crypto-friendly regulations have incentivised institutional players to ramp up their digital asset plans, including incorporating stablecoins into their business, either by launching dollar-pegged tokens of their own or by folding in existing ones into their services.
“Another key factor is the growth of onchain trading, DeFi, and remittances, where stablecoins are the preferred settlement unit,” Christian Harris, chief analyst at Investing.co.uk, told DL News.
The success of stablecoins also comes with risks.
“Any event that results in a depeg of coins and results in consumer harm would result in reputational risk for the stablecoin industry, and puncture this growth,” Nithya Sridharan, digital assets product director at TP ICAP, told DL News.
Let’s not forget the cascade of crypto company collapses that followed in Terra’s depeg in 2022.
US banking groups have warned that some provisions in the Genius Act run the risk of draining them of some $6 trillion worth of deposits.
Brian Armstrong, Coinbase’s CEO, has rejected those claims.
In nations where dollar-pegged tokens are popular because of local currency instability, stablecoins could undermine central banks’ ability to control inflation, Cristiano Ventricelli, VP and senior analyst of digital assets at Moody’s Ratings, told DL News.
“Should a USD-linked stablecoin fail, it could significantly erode domestic savings denominated in such stablecoins,” Ventricelli said.
And then there are always central bank digital currencies. Only a handful of CBDCs have gone live and US President Donald Trump has banned the formation of a digital dollar.
Even so, “if there’s more adoption they have the potential to partially displace private stablecoins,” Harris said.
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Post of the Week
Everything is getting tokenised these days. The US dollar? Tokenised. Gold? Tokenised? Securities? Tokenised.
