Tether Leads Stablecoin Surge: Dominates Market with $120 Billion in Circulation

• The stablecoin market has now become the 18th largest holder of U.S. Treasuries, an impressive achievement for this sector.
• Recent analysis highlights the growing significance of stablecoins in providing global access to USD savings.
• Bernstein’s research states, “Stablecoin usage has decoupled from crypto and is increasingly being held for non-crypto use cases.”

Discover how stablecoins have become a crucial player in the U.S. Treasury market, and their evolving use cases beyond crypto trading.

The Rising Influence of Stablecoins in Financial Markets

The stablecoin arena has seen unprecedented growth, with total circulation skyrocketing to $170 billion. This surge underscores their newfound role as systemically important financial instruments, extending the reach of digital dollars globally. These assets are no longer confined to facilitating crypto transactions but are now pivotal in international finance and savings.

New Players Intensify Competition

Amid this rapid expansion, the competition in the stablecoin sector is heating up. BitGo’s announcement of its upcoming USDS stablecoin set for a January 2025 launch marks a significant entry. Similarly, Coinbase’s introduction of cbBTC for its Base layer-2 network demonstrates the market’s vibrant and competitive nature. These developments follow BitGo’s strategic partnership with BiT Global to amplify custody operations for Wrapped Bitcoin (WBTC), indicating robust market dynamics.

Shifting Use Cases of Stablecoins

Stablecoins are increasingly being utilized for purposes beyond crypto trading. Insights from Bernstein reveal a growing trend of stablecoins being held for non-crypto activities like cross-border payments and savings. This shift is reflected in the record 22 million monthly active wallets holding stablecoins, despite varied trading volumes. The integration of stablecoins with payments and fintech platforms, including PayPal’s USD stablecoin and USDC, highlights their expanding adoption.

Market Leaders and Profitability

Tether (USDT) and Circle’s (USDC) continue to dominate the stablecoin market with circulations of $120 billion and $35 billion, respectively. Tether’s prominence is largely driven by its extensive use in cross-border payments and integration with offshore exchanges, particularly outside the U.S. Notably, new entrants like PayPal’s PYUSD are also making significant inroads, nearing $1 billion in circulation. The financial robustness of these issuers is evident from their retention of float income from U.S. Treasuries.

Conclusion

In conclusion, the stablecoin market’s ascent to the 18th largest holder of U.S. Treasuries signifies their critical role in modern finance. As these digital assets diversify in use and competition intensifies, their importance in global finance only grows. This trend offers a clear indication of the future trajectory and potential for stablecoins in the broader economic landscape.