In recent years, there has been a rapid growth of interest in stablecoins worldwide. Banks, fintech companies, and leading payment platforms are quickly adopting digital currencies to keep up with technological changes. Why are such diverse players in the financial market so actively betting on stablecoins, and how can this change the familiar architecture of the global financial system?
Explosive growth of stablecoins: new trends and statistics
What are stablecoins? These are cryptocurrencies whose value is pegged to stable assets such as the US dollar or gold. The most notable representatives of the market are USDT by Tether and USDC by Circle. Unlike traditional cryptocurrencies, whose value is subject to high volatility, stablecoins provide predictable rates thanks to reserve backing.
Statistics from recent years demonstrate impressive growth in the popularity of these digital instruments. According to Morgan Stanley Investment Management, by September 2023, the total market capitalization of stablecoins reached $300 billion, which is 75% higher than the previous year. This large-scale leap indicates a global trend toward the digitalization of financial flows.
Major investment banks and analytical centers predict further acceleration of this growth. Citi claims that the actual pace of stablecoin adoption has exceeded even the most optimistic expectations: according to the bank’s latest forecast, by 2030, the volume of stablecoin issuance may grow to $1.9 trillion in the base scenario and up to $4 trillion in the most favorable conditions. These figures are impressive, but what is behind them? The number of users and companies integrating stablecoins into their infrastructure is constantly increasing. For example, payment services like Stripe have started supporting stablecoin payouts, and cross-border transfers using them are becoming commonplace.
Why banks and fintech companies are betting on stablecoins
What are the advantages of stablecoins for traditional market participants? First of all, it is the ability to make payments around the clock and instantly settle transactions. In the classic banking system, transfers are often accompanied by delays, fees, and complex procedures, while stablecoins allow value to be transferred in digital format as easily as sending an email.
According to Joe Lau, co-founder and president of the Alchemy platform, stablecoins and deposit tokens are becoming the foundation for programmable and transparent next-generation cash flows. He notes: “On this basis, money can move with the security of the banking system and the speed of the internet” (source — CoinDesk).
The advantages for financial companies include:
- Lower fees for money transfers
- Lightning-fast settlements, especially in international operations
- The ability to integrate digital money into corporate services and payroll projects
Real examples are already noticeable. For instance, companies in the payroll services sector are considering stablecoins as an element of infrastructure for international payments, and payment giants such as Stripe are developing solutions based on them.
It is important to note here that online platforms outside the classic financial sector are also accelerating the adoption of stablecoins, as instant settlements and the predictability of digital assets are critically important to them. This is especially evident in highly competitive segments where companies are testing new models of user interaction.
For example, in the industry of gamified entertainment services, stablecoins are already widely used for topping up balances and withdrawing funds.
Gambling services and online casinos were among the first to use such a system. This is confirmed by data from industry websites in the top search results. Such as a site featuring online casinos where you can get an Ontario no deposit bonus. According to the site, almost all major and lesser-known online casinos have long and successfully accepted various cryptocurrencies, including stablecoins.
The iGaming sector experiments with the technology earlier than traditional financial institutions precisely because of the high transaction frequency and the need to reduce operating costs.
So what is the key difference from classic banking and payment channels? Stablecoins are not tied to a specific country or regulator, and the technological base allows for flexible scaling of services and integration of new functions.
Tokenized deposits: alternative or addition?
However, development is not limited to stablecoins alone. In recent months, banks have been more actively implementing tokenized deposits—digital analogues of classic deposits, issued as tokens on the blockchain. A classic example is JPM Coin, a project by JPMorgan, and HSBC has announced its own initiatives in this direction.
How do tokenized deposits differ from stablecoins? It is important to understand: a stablecoin is backed on a 1:1 principle, meaning that for every digital dollar issued, there is one real dollar in the issuer’s account. Tokenized deposits more often use a fractional reserve model, which is familiar to banks: part of the funds is kept in reserve, and the rest is used in the bank’s investment activities.
Who are these instruments intended for? Tokenized deposits are most often available only to clients of a specific bank and are integrated into its infrastructure. Stablecoins, on the contrary, are universal and can be used by any participant—from individuals to large corporations.
Banks use tokenized deposits to improve internal settlements, speed up payments, and test new digital services without going beyond established regulatory norms.
Competition and convergence: how financial infrastructure is changing
The question arises: are banks competing with stablecoin issuers, or is a convergence of models occurring? Here, a two-way process is observed. Banks are readily adopting technological solutions that have appeared in the digital currency market and are creating their own tokenized products. In turn, stablecoin issuers strive to integrate with banking structures and comply with capital and reserve requirements.
According to Joe Lau, “tokenized deposits turn the banking system into programmable infrastructure, and stablecoins modernize the dollar for global markets.” This leads to the emergence of hybrid platforms and a search for new regulatory standards in the digital environment.
How is the financial landscape changing? Competition between banks, fintech companies, and new players is increasing. The number of innovations in services and ways of storing funds is growing, and the adoption of automation and programmable payments is accelerating.