Since 2017, the ascent of stablecoins has been nothing short of spectacular; according to current forecasts, by the second quarter of 2024, they are expected to overtake Visa in terms of total payments volume (TPV). This much-awaited achievement highlights the important role that stablecoins are starting to play in the world of international payments, especially in the context of cryptocurrency trading.
Stablecoins are quickly catching up to Visa as the standard for tracking payment volumes, mostly because they are becoming more and more popular as the main means of transacting in cryptocurrencies. According to data, trading activities account for around 90% of stablecoin transactions. A significant amount of these transactions are linked to wash trading, a technique that artificially increases trade volumes through systematic and repetitive buying and selling.
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Because stablecoins are largely used for retail and commercial transactions, it may be inaccurate to compare their volume with traditional payment networks like Visa given their prevalence in the cryptocurrency trading industry. In a blog post, Visa states that stablecoins are primarily useful in the cryptocurrency ecosystem for enabling smooth and rapid transfers between different cryptocurrencies.
In spite of this, stablecoins have facilitated an astounding amount of transactions. With a monthly active user population of 27.5 million, stablecoins are now processing $265 billion in volume (MAUs). This works out to about $9,600 per MAU on average.
With a market valuation of $110.86 billion, Tether is a good example of the market’s significant expansion. Even though stablecoins are mostly used for trading, there is an increasing likelihood that they will eventually be accepted and integrated into more mainstream financial systems.
