The cryptographic community is divided on the future of stablecoins, some expected growth and other concerned about regulatory obstacles in 2025.
Stablecoins are everywhere. Rich companies and VCs see them as a miracle solution for companies with obsolete payment systems. In countries with high inflation, such as Brazil, Mexico and Colombia, ordinary users are increasingly turning to stablecoins to save money or send funds to family members abroad. One thing is clear: the stablecoins are there to stay.
And the figures speak for themselves. According to data from Blockchain Firnsic Firm Strysysis, Stablecoins now represent around 70% of the share of indirect flows of local trade from Brazil to world exchanges.
“The high levels of Brazil of Stablecoin activity, as well as the general interest in digital products and services, arouse a significant interest in the main cryptography players, including Circle, which announced its official launch in Brazil in May 2024. “”
Chain-analysis
Nubank, the largest Brazilian digital bank in Latin America, also continues the trend. With more than 85 million customers in Brazil and 6 million in Mexico and Colombia, the bank now offers a fixed annual return of 4% to users who hold USD Coin (USDC), a stablecoin issued by Circle. Nobank says it has started to offer yields on Stablescoins because “more than 50% of new users of Nubank Crypto chose USDC as the first digital asset”.
Large venture capital companies also bet on stablescoins, expecting them to change the way small businesses manage payments. The general partner of Dragonfly Capital, Haseeb Qureshi, says that Stablecoins will go beyond negotiation and make things like instant establishments 24/7 possible – unlike the banks that close the holidays.
The strategists of Citi Wealth also see great potential in the Stablecoins, saying that they “could end up strengthening the domination of the US dollar” because market activity has reached record heights with 5.5 billions of dollars in transactions in First quarter 2024.
Marc Boiron, CEO of Polygon Labs, sees enormous potential in Stablecoins, although it emphasizes that their growth does not only concern market size.
“What is convincing is the way the fundamentals align,” Boiron told Crypto.news in a comment. He stressed that regulatory executives such as crypto-active markets in Europe also give clarity, helping traditional financial institutions to enter the space of Stablecoin.
“Regulatory clarity acts as a catalyst rather than a barrier. Managers like Mica providing clear guidelines, traditional financial institutions and Fintech companies can now approach stablecoins with greater confidence. »»
Marc Boiron
Not everyone shares Boiron’s optimism about Stablescoins. For Paolo Ardoino, CEO of Tether – the largest stabing transmitter by market capitalization – the mica regulations seem to say the least eccentric. It argues that requiring it from stablecoin issuers to keep at least 60% of their reserves in cash deposits could create serious risks for banks.
Ardoino compared the regulation to the incident with the USDC of Circle in 2023, when billions of dollars of USDC reserves were trapped in the Silicon Valley Bank Effondée, which failed after a bank race.
“I do not want to endanger these 300 million people who hold USDT because I have to keep 60% of deposits in uninsured cash in a European bank.”
Paolo Ardoino
Analysts of the French Society of Blockchain Kaiko emphasize that European regulations do not affect all the stable transmitters as well.
Until now, they say that one company has benefited from the stricter rules – Circle, including the EURC and the USDC of Stablecoin EURC and the USDC have seen the greatest jump in daily negotiation volumes since that Mica has entered into force.
It could still be too early to draw conclusions. But one thing is clear – a big money is eager to find a way to make the “possibility of a dollar billion” occurs. The Californian venture capital company, Pantera Capital, also notes that these assets now represent more than 50% of blockchain transactions, compared to only 3% in 2020.
What is not clear is how or where this breakthrough will come, in particular with the regulations which already exert pressure on the largest stable companies.
