The City Wealth report shows that stablecoins are strengthening the role of the US dollar as the world reserve currency. The report also highlights that the majority of cryptocurrency trading volume comes from stablecoins, most of which are denominated in US dollars. Stablecoins are becoming more popular, with Binance and Circle partnering up and Ripple releasing the RLUSD stablecoin.
According to a recent report from Citi Wealth, stablecoins could challenge the idea that Bitcoin and Co could threaten the hegemony of the US dollar. In fact, the authors argue that USD-backed stablecoins could actually enhance the dollar's role as the world's reserve currency.
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Originally, cryptocurrencies such as Bitcoin were considered as rivals to currencies issued by central banks. In fact, some people believed, and continue to believe, that Bitcoin could end the hegemony of the US dollar.
City Wealth
Stablecoins account for 80% of cryptocurrency trading volume, with 93% denominated in USD
The analysts further wrote that stablecoins, which have large trading volumes representing around 80% of total crypto trading volume, are “challenging that narrative.”
Stablecoins pegged to the USD, such as USDT and USDC, far outperform alternative options. According to CoinGecko, the top 20 stablecoins are all USD-pegged coins, and when you look outside the top 10 market capitalizations, trading volume (indicating actual usage) drops dramatically. Masu.
The authors note that 93% of stablecoins are USD-based, and most are issued by companies “backed by dollar reserves, U.S. Treasuries, repurchase contracts, and money market funds.” There is.
Total market capitalization of stablecoins, source: Citi Wealth
The report goes on to say that stablecoins will overtake Visa in issuance in 2024, which is why credit card providers are launching their own stablecoin projects.
Since its creation in 2014, the stablecoin market capitalization has reached nearly $180 billion, much of which has occurred in the past five years. Activity reached an all-time high, with transaction value reaching $5.5 trillion in the first quarter of 2024. By comparison, Visa's transaction volume was approximately $3.9 trillion.
City Wealth
Trump, a crypto supporter, could further strengthen the dominance of the US dollar
With crypto advocate Donald Trump set to return to the White House soon, the report suggests that an aggressive regulatory approach to stablecoins could further strengthen the US dollar.
The U.S. House of Representatives is likely to vote on legislation aimed at introducing a regulatory framework for these assets. While these efforts are intended to protect investors and maintain financial stability, regulatory clarity could make them even more attractive.
City Wealth
Therefore, the authors conclude that, rather than weakening the dollar's stance, this could strengthen access to the US dollar around the world and strengthen the long-standing global dominance of the US currency. .
In other developments, USDC issuer Circle and cryptocurrency exchange Binance just announced that they will work together to expand USDC.
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At Abu Dhabi Finance Week, they said that Binance is making USDC “more broadly available across the company's entire suite of products and services, bringing more than 240 million global users to its trading, savings, and payments applications.” “We will enable them to seamlessly access and use USDC.” .
Ripple also recently received approval for the stablecoin RLUSD, which Tron's Justin Sun seems happy to host on the blockchain.
