The Year Of The Stablecoin

Dateline: Woking, 31st December 2024.Stablecoins are already big business. More than $150 billion worth of Tether (USDT), Circle (USDC) and other tokens backed by fiat currency (in theory, at least) are held by people around the world and volumes are growing. Revolut has joined the likes of PayPal with its own stablecoin and despite Europe’s new regulations, the growth of stablecoins of various kinds will undoubtedly accelerate through the coming year.Subscribe nowWhat Are Stablecoins?While “stablecoin” originally meant a cryptocurrency with a price algorithmically maintained at a constant level against some external benchmark, the term has come to mean any asset intended to maintain a specific price and backed by reserves such as fiat currencies, commodities, or even other cryptocurrencies. Within that category, volumes are dominated by dollar-backed stablecoins such as Circle’s USDC and Tether’s USDT that have exploded in popularity, with the consequence that their issuers earn some pretty decent profits through the yields on the underlying assets (eg, U.S. Treasuries).Why the growth? Well, the first point to note is that the use of these stablecoins is not confined to developing markets that lack banking infrastructure. According to Chainalysis (October 2024), the UK is Europe’s largest crypto economy and a key driver of the region’s growth, particularly with respect merchant services and, of course, the stablecoins that dominate the European market, making up nearly half of total inflows (with notable growth in both retail and professional use). Stablecoins far exceed bitcoin for fiat currency trade, with the euro accounting for…The Year Of The Stablecoin