Crypto’s $205 Billion Stablecoin Market Set to Go Mainstream

Bloomberg: So, you know how Bitcoin has been all the rage lately? Well, while everyone was buzzing about it hitting over $100,000, a lot of financial firms were actually looking at something else—stablecoins. These are the cryptocurrencies that are designed to keep their value steady, usually pegged to the US dollar.

Big names like Visa and PayPal are diving into this space, investing in projects that involve stablecoins. It’s a smart move since these tokens are becoming more popular for everyday transactions. Unlike Bitcoin, which can be super volatile, stablecoins are starting to be used more and more around the globe.

Rob Hadick from Dragonfly mentioned that there’s a growing demand from major companies for stablecoins, especially for things like paying contractors and remittances. It’s often tough to send US dollars without using stablecoins, and companies want to avoid the slow and costly traditional banking systems.

Looking ahead, the competition in the stablecoin market is heating up. It’s now worth about $205 billion! Tether is still leading the pack, but there are some challenges on the horizon as regulations tighten, especially in the EU.

Speaking of regulations, the EU has new rules that require stablecoins on exchanges to be issued by licensed entities. Circle got its license, but Tether hasn’t applied yet, which could put it at risk of being delisted from some exchanges.

Meanwhile, US companies are jumping on the bandwagon too. Visa has launched a platform for banks to issue stablecoins, and PayPal has its own version called PYUSD. It seems like everyone wants a piece of this pie!

Augustus Ilag from CMT Digital pointed out that issuing stablecoins is a great business model. Companies see it as a way to diversify and create new revenue streams. Plus, using blockchains for stablecoins cuts down on transaction costs and makes everything run smoother.

Robinhood is also getting involved, working with Paxos to create a network for stablecoin use. They’re seeing a lot of money moving around, which shows just how valuable stablecoins can be.

Of course, it’s not all sunshine and rainbows. Remember TerraUSD? That algorithmic stablecoin crashed in 2022, causing a massive selloff in the crypto market. It was a tough lesson for many in the industry.

Even now, there’s no solid federal regulation for stablecoins in the US, but the EU is moving forward with clear guidelines. This is leading to more companies in Europe adopting stablecoins.

With the crypto market buzzing after the recent US elections, there’s a lot of optimism for 2025. Stablecoins might just be the easiest way for non-crypto companies to dip their toes into the digital asset world without getting into the risky stuff.

As Anna Yuan from Perena said, stablecoins let companies get involved in crypto without dealing with the more dangerous aspects of the market. It’s an exciting time for stablecoins!