An astronomical rise within the stablecoin market is anticipated over the next half-decade, with an approximately 2140% increase from $125 billion to $2.8 trillion avowed in a recent report presented by broker Bernstein. This surge in numbers is expected as a result of enhanced integration with consumer platforms which are believed to catalyse an upward spiral in growth for stablecoins.
Stablecoins, a unique form of cryptocurrency that retains a stable value by being pegged to other assets typically the U.S. dollar, will capitalize on this growth to expand user acquisition and distribution beyond just platforms native to crypto. The insights culminate in the report’s projection that we’ll soon see collaborations between major global financial platforms and consumer platforms to release their co-branded stablecoins for operationalizing value-exchange natively on these platforms.
A key point of emphasis in illustrating this shift is the news regarding PayPal’s entrance into the crypto market. Indeed, this is the first instance where a leading financial corporation is forging ahead with its own dollar-pegged stablecoin, christened PayPal USD (PYUSD). An Ethereum-based token, PYUSD will initially be accessible on PayPal, then on Venmo, and can be swapped for dollars whenever required.
The report underscores the role of the high-speed financial settlement layer, also known as layer 2 or centralized consumer platforms, in the context of public blockchains like Ethereum. Such technological systems will be instrumental in powering the propulsion of stablecoins.
Despite the promise of a bright future, the advent of stablecoins does bring potential caveats. Regulation will be a key concern, particularly as the report posits growth to be chiefly driven by “regulated, onshore stablecoins”. Although stablecoin regulation does enjoy broader political backing compared to crypto regulation, the complexities of these regulations will be a formidable challenge. Countries like Singapore, Hong Kong, and Japan are now starting to explore the potential of stablecoins, launching pilot projects alongside Central Bank Digital Currencies (CBDCs) initiatives.
All in all, the projected rise of the stablecoin market signals a massive shift in the crypto space. However, the transition is unlikely to be smooth, as regulatory challenges and the broader transformations necessary for such growth are sure to create friction. Despite these challenges, the global acceptance and integration of stablecoins appear to be on the horizon.
Source: Coindesk
