The stablecoin sector continues to grow quickly. It’s a lot like how generative AI tools such as ChatGPT proliferated in their early days. We’re seeing the regulatory clarity come into place, and the institutional interest is really sharpening. As such, stablecoins are expected to exceed a $1.6 trillion market capitalization by 2030. In a more optimistic case, Citi analysts say the market might grow all the way to more than $3.7 trillion. This growth is driven by the movement of stablecoins beyond crypto-centric applications and into broader financial and public sector use cases.

As of writing, the stablecoin market tops $230 billion in valuation. Such strong growth is indicative of a nearly 30-times increase in just the last five years alone. The primary driver of crypto trading represents as much as 95% of all stablecoin trading volumes. We forecast the strongest growth in B2B cross-border payments, consumer remittances and in-migration to spark the activity in institutional capital markets.

Regulatory Tailwinds Propel Growth

Then in early 2025, it will be time to introduce new US legislation. This legislation would establish an overall legal framework for issuing stablecoins and holding their reserves. This regulatory clarity eliminates a significant barrier that has stunted the sector. Now, incumbent titans and fresh challengers alike could build innovative new services on a much clearer legal bedrock. That clarity is likely to spark faster adoption and faster innovation on the stablecoin ecosystem.

With regulatory certainty increasing, stablecoins are poised to further extend their reach. They are currently extending beyond crypto-related use cases and expanding further into financial services and the public sector. This transition is fueled by deep institutional appetite and international market demand for US dollar-denominated digital assets.

This regulatory support is causing a tidal wave effect, changing the way stablecoins are viewed and used not just in Web3, but in every industry. It’s building confidence and helping promote broader adoption beyond the fringes of the shadow finance sector.

Stablecoins Bolstering Treasury Demand

Issuers of stablecoins collateralized by safe, liquid assets could possess a greater amount of Treasuries by 2030 than any existing foreign jurisdiction. According to Citi’s most optimistic (if not likely) base case scenario, stablecoins could contribute more than $1 trillion in new Treasury demand. This long overdue influx of capital speaks to the rising importance and prominence of stablecoins in the expanding global financial ecosystem.

The increasing demand for Treasuries driven by stablecoin reserves reflects the stability and reliability that these digital assets can offer. This makes it especially attractive in uncertain economic times.

This trend underscores the stablecoins’ ability to step into a prominent role within the global financial systems. They will not only change digital asset markets, but transform traditional investment strategies.

Global Adoption and Use Cases

For emerging markets such as Argentina, Nigeria, and Turkey, retail adoption of stablecoins is booming. Individuals are using these currencies to shield themselves from inflation and currency volatility. In these areas, stablecoins present a realistic option to national fiat currencies. They create continuity and a buffer from the whims of economic volatility.

The role stablecoins have played in these markets is an example of how they can be used to solve real-world financial problems. It underscores the impact that community foundations have by deploying their financial ingenuity in areas experiencing economic distress.