Stablecoins play a huge role in today’s crypto economy, and despite the recent downturn in the overall market, stablecoin volumes still dominate most exchanges.
According to data from Coin Metrics, on-chain stablecoin settlements reached over $7 trillion in 2022 and are expected to end the year around $8 trillion. While the largest card network, Visa, processes some USD 12 billion a year.
Peter Johnson, co-head of Brevan Howard Digital, said that stablecoin selloffs have already surpassed those of Mastercard and American Express. Furthermore, he predicted that by 2023 stablecoin on-chain volumes will exceed Visa transaction volumes.
He also noted that stablecoin volume would not only surpass that of Visa, but would very likely surpass the aggregate volume of the four major card networks (Visa, Mastercard, AmEx, and Discover). Johnson added that these stablecoin on-chain volumes do not include trading volume on centralized exchanges, which has a significant portion of its own.
3/ (Note that this is just on-chain settlement volume, and does not include trading volume on centralized exchanges)
—Peter Johnson (@TheChicagoVC) December 21, 2022
Although the comparison certainly indicates a significant increase in stablecoin usage, many users pointed out that the comparison between the two entities does not hold up, as they are two different things.
A distinction must be made between credit card volumes and stablecoin settlements. Credit card transactions are typically associated with consumer spending, while fiat-denominated crypto assets are primarily associated with cryptocurrency speculation and decentralized finance.
Hmm kinda comparing apples and oranges. Mastercard/discover etc volumes are sourced from consumer spending. Onchain volume is sourced from investor speculation.
This $7+tn would need to come from payments for consumer goods/services using stablecoins to be a relevant comparison
— Kim âš¡ï¸ (@0xKimberly) December 21, 2022
A key obstacle to stablecoins being actively used by consumers in their daily lives, just like Visa and Mastercard, is regulation. However, Republican Senator Pat Toomey, who will retire from the US Congress at the end of his term, intends to change this situation with his stablecoin bill. The bill proposes to allow non-state and non-bank institutions to issue stablecoins as long as they obtain a federal license created and issued by the US Office of the Comptroller of the Currency (OCC) and are backed by “highly quality”.
In terms of market cap, stablecoins currently make up about 16.5% of the total. Data from CoinGecko indicates that the value of all stablecoins together is about $140 billion. Tether (USDT) currently dominates the stablecoin market with a total supply of 66.3 billion USDT, followed by Circle’s USDC with a market supply of 44.3 billion USD Coin (UDSC).
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