Stablecoins Could Grow to 10% of U.S. Money Supply: Standard Chartered and Zodia Markets

Stablecoins could grow to 10% of the U.S. money supply and foreign exchange transactions once the sector becomes more legitimized, Standard Chartered (STAN) and Zodia Markets said in a report Thursday. Currently, the stablecoin market is equivalent to 1% of U.S. M2 and 1% of foreign exchange transactions, the report said. "As the sector becomes legitimized, a move to 10% on each measure is feasible," wrote authors Geoff Kendrick and Nick Philpott. A stablecoin is a type of crypto that is designed to hold a steady value and is usually pegged to the U.S. dollar, though some other currencies such as gold are also used. M2 is a measure of U.S. money supply, and includes cash, savings and other short-term investments. The catalyst for this surge in adoption will be U.S. regulation of stablecoins, the authors said, adding that cross-border payments and FX-equivalent transactions are key areas of growth. Three bills were brought forward during Joe Biden`s administration but scant progress was made, the report noted, adding that more success on the regulatory front is expected when Donald Trump`s administration takes over in early 2025. Bernstein said that stablecoins were becoming more important to the global financial system, and constitute the 18th-largest holder of U.S. Treasuries, the broker said in a research report in September. Read more: Stablecoins Are Becoming Systemically Important, Bernstein Says

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