Regulatory changes can be the catalyst to trigger significant adoption of stableecoins and blockchain -tech in 2025, according to investment bank giant Citigroup.
“2025 has the potential to be blockchain’s ‘chatgpt’ moment to adopt the economic and public sector, driven by regulatory changes,” a team of Citigroup financial analysts said in a April 23 report.
A combination of growing legislative support and adoption from financial institutions has set the stage for stablecoin market capsule to fly as high as $ 3.7 trillion by 2030 or in a basic case, $ 1.6 trillion.
“The most important catalyst for their greater acceptance can be legislative clarity in the United States, which may enable greater integration of stablecoin specifically and blockchain more widespread in the existing financial system,” Citi said in his report.
“Legislative support and the increased integration of digital assets into established financial institutions set the stage for increased use of stableecoins.”
On the heels of US President Donald Trump’s crypto-friendly administration, assuming power earlier this year, legislators weigh stablecoin legislation, such as Genius Act, which seeks to regulate us stableecoins, ensuring their legal use for payments.
A US regulatory framework for stableecoin would also support the demand for dollar risk assets inside and outside the United States, according to the report.
“StableCOin issuers will have to buy US Treasury or comparable assets with low risk against each stablecoin as a measure of having a safe underlying collateral,” Citi said.
“StableCOin issuers could hold more US treasuries by 2030 than any single jurisdiction today.”
US will continue to dominate stableecoins
In the future, CITI predicts that the stableecoin supply will remain the US dollar denominees, with non-American countries promoting national currency or a central bank’s digital currency.
In April, the stableecoin market capital had crossed $ 230 billion, an increase of 54% since last year, with Tether (USDT) and USDC (USDC) that dominated 90% of the market.
“While the dollar dominance may develop over time, with the euro or other currencies promoted by national rules, stablecoins can be seen by many non-American decision makers as an instrument for hegemony for dollar,” Citi said.
“Geopolitics remains fluid. If the world continues to drive into a multi-polar system, decision makers in China and Europe will be eager to promote the central bank’s digital currencies (CBDCs) or stableecoins issued in their own currency.”
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However, there are still some challenges for the market. StableCOin market capital could settle down around $ 500 billion if “the adoption and integration challenges continue.”
DEPEGGING has also been marked as a potential problem with 1,900 cases in 2023, according to CITI, including the biggest USDC Deped after the collapse of the Silicon Valley Bank.
“A major depocthing event would probably dampen the liquidity of the crypto market, trigger automated liquidation, impair trading platforms’ ability to meet redemptions and potentially have wider infection effects for the financial system,” the company said.
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