Stablecoins to hit $1.9T as trust surpasses fees in exchanges

A Citi (NASDAQ: C) report has predicted that the stablecoin market will achieve a $1.9 trillion valuation by the end of the decade in its base case scenario, while leaving room for an additional growth spurt.

Citi analysts disclosed that stablecoins are the “ChatGPT moment” for the institutional adoption of blockchain. Akin to the rise of artificial intelligence (AI) chatbots, the report tips stablecoins to record a high growth in valuation in the coming years.

While Citi analysts have forecasted a $1.9 trillion base case for the asset class, the report predicted that stablecoins can climb to $4 trillion by the end of 2030 in its bull case scenario. The global stablecoin market capitalization sits at $307 billion, rising from $200 billion at the start of 2025.

Citi is pinning its prediction on the 58% growth notched by stablecoins in 2025 alone, with analysts forecasting that the trend will continue until the end of the decade. Apart from a strong 2025, Citi analysts have highlighted a streak of stablecoin project announcements in the ecosystem.

Early in the year, Trump-backed World Liberty Financial (WLF) threw its hat into the stablecoin race with the launch of USD1, with a raft of U.S.-based financial institutions planning their stablecoin rollouts. Citi noted that the flurry of announcements stemmed from fresh regulatory support in the U.S., which was highlighted by the signing of the GENIUS Act by U.S. President Donald Trump.

While use cases have surged from domestic and cross-border payments, Citi notes that the stablecoin boom will not completely overhaul the financial system. However, analysts refer to the innovation as “continued progress” toward smarter finance.

“We don’t believe crypto will burn down the existing system,” read the Citi report. “Rather it is helping us reimagine it.”

Citi disclosed that domestic payments are already capable of processing payments in real-time and at low cost, providing competition to stablecoins. While cross-border payments appear to be the primary use case, the report noted that fintech firms and traditional financial institutions are making significant progress to reduce settlement times and fees.

A streak of challenges for stablecoins

Despite the positive numbers for stablecoins, Citi’s forecast also looks at the challenges in the sector. Firstly, regulatory uncertainty for stablecoins remains outside the U.S., leading to hiccups in global adoption metrics.

For several stablecoin issuers, the question of reserves remains a lingering concern, while others face allegations of market manipulation. Several high-profile stablecoin collapses, such as TerraUSD (UST), have sparked concerns over collateral transparency, prompting authorities to tighten regulations.

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Digital asset exchange users are opting for trust over low fees: Kraken Survey

Mark Greenberg, global head of consumer at Kraken, disclosed that the findings indicated that U.S. digital asset users are not blindly chasing low fees but are factoring a raft of factors in making their final decision. The study noted that only 16% of respondents highlighted fees as a primary factor in selecting an exchange to buy and sell digital assets.

Meanwhile, 26% revealed that trustworthiness is the single biggest factor in determining their choice of an exchange, with 14% placing a premium on security features.

“As the market matures, investors are showing they value long-term confidence over short-term savings,” said Greenberg. “People want to know their assets are safe, that the platform is reliable, and that they can access the tools they need without unnecessary complexity.”

Kraken’s survey highlighted that U.S. residents are not particularly concerned with the regulatory compliance of digital asset exchanges they trade with. Only 6% of respondents disclosed that regulatory compliance played a role in their choice of exchange, while 7% pointed to customer support features as a significant factor.

Given the range of factors, 44% of respondents confirmed that they maintain accounts with at least two digital exchanges, while nearly 26% revealed using over three exchanges. Respondents disclosed that multiple exchanges offered the perks of diversifying platform risk while providing access to wider listings.

A growing number of U.S.-based digital asset users are turning to decentralized exchanges, offering the benefits of greater privacy and revenue opportunities via the provision of liquidity. Kraken’s report noted that the trading volumes of decentralized exchanges have surged by 259% since 2024, buoyed by the rising popularity of Hyperliquid and Astar.

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Stiff exchange competition in the US

While Coinbase (NASDAQ: COIN) holds the largest market share for digital asset exchanges, several service providers are keen on increasing their slice of the ecosystem. Kraken is mulling the option of going public with immediate plans to raise funds ahead of a tentative IPO in 2025, mirroring Gemini and Coinbase.

Amid the flurry of IPOs, a frantic regulatory compliance race is underway among U.S.-based entities, but a wave of security breaches has raised concerns. Coinbase has suffered several customer data leaks, while Kraken has faced critical bugs in the past, forcing consumers to approach the choice of an exchange with caution.

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Watch | MiCA and the Future of Stablecoins: What Comes Next for Tether?

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