A recent report from Citi’s Future Finance think tank anticipates significant growth in the stablecoin market, predicting it could exceed the total market capitalization of all cryptocurrencies—currently valued at approximately US$3.5 trillion (or AUD$5.4 trillion) according to CoinGecko. Citi’s report suggests that by 2030, stablecoins could reach a valuation of US$1.6 trillion (AUD$2.4 trillion) in its conservative scenario and potentially soar to US$3.7 trillion (AUD$5.7 trillion) under favourable conditions.
The report, titled "Digital Dollars: Banks and Public Sector Drive Blockchain Adoption," highlights that the year 2025 may see stablecoins achieving what is described as their “ChatGPT moment,” reflecting a surge in adoption across both financial and public sectors, bolstered by legislative advancements. However, it also warns of potential stagnation if challenges related to adoption and integration are not effectively addressed. Currently, the stablecoin market stands at around US$250 billion (AUD$385 billion), suggesting that Citi’s conservative prediction entails about a 600% increase, whereas the optimistic outlook imagines a remarkable 1500% growth by 2030.
Citi believes the applications of stablecoins could expand beyond their current usage as a digital cash alternative for cryptocurrency traders. They envision stablecoins playing a larger role in mainstream payment systems and remittances. Among the drivers for increased supply could be a notable shift in how households and businesses manage their liquidity, moving from physical cash to stablecoins. The report also suggests that stablecoin issuers might invest as much as US$1 trillion in net new US Treasuries by 2030 to support their stablecoin holdings, potentially surpassing any single jurisdiction’s treasury holdings.
Ronit Ghose, global head of Future of Finance at Citi, elaborated that stablecoins could be pivotal in bringing more efficient and accessible financial products to the mainstream economy, enabling tokenised financial assets and aiding payment processes for small to large enterprises. He emphasised the appeal of stablecoins in facilitating global access to currencies like the US dollar and euro in a cost-effective manner.
Regulatory Framework Still in Development
Much of the anticipated growth hinges on establishing a robust regulatory framework for stablecoins. However, regulatory discussions continue to face hurdles, especially in the US. Most recently, the GENIUS Act, which was designed to create a comprehensive regulatory structure for stablecoins, failed to pass the Senate, garnering only 49 out of the 60 necessary votes. Notably, a couple of Republican senators joined Democrats in opposing the bill, reflecting ongoing bipartisan divisions.
Democratic Senator Mark Warner, previously supportive of the bill in committee, expressed hesitation, stating that the legislation is not yet complete enough to warrant a vote. On another note, growing concerns from Democrats around the involvement of the Trump family in the cryptocurrency sector have only intensified discussions, particularly regarding a recent deal that involves a stablecoin linked with the Trump family’s DeFi project for a substantial investment in the exchange Binance.
As the conversation around stablecoin regulation continues to evolve, the essential role of stablecoins in the financial landscape appears poised to expand significantly, provided that clarity in regulatory frameworks can be achieved.
