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Stablecoins have ballooned into a $230-billion industry, which is equivalent to more than 1% of the US money supply.
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The stablecoin industry’s rapid growth in recent years is likely owed to major payment providers integrating the novel technology and making it easier for businesses to get paid in fiat-equivalent tokens, according to Polygon Labs CEO Marc Boiron.
In an interview with Cointelegraph, Boiron said, “Companies like Stripe and PayPal integrating stablecoins is likely the primary catalyst for their growth.”
PayPal’s foray into digital assets began in 2022 when it started letting users transfer and receive Bitcoin (BTC), Ether (ETH) and other tokens. One year later, the company launched its US dollar-pegged PayPal USD (PYUSD) stablecoin, which quickly surpassed $1 billion in market capitalization.
Since peaking at more than $1 billion, PYUSD’s market cap has fallen back to around $705 million. Source: CoinGecko
When PYUSD launched, PayPal CEO Dan Schulman said, “The shift toward digital currencies requires a stable instrument that is both digitally native and easily connected to fiat currency like the US dollar.”
Stripe has also integrated stablecoins through its Pay with Crypto feature, which lets businesses accept USD Coin (USDC) payments on Ethereum, Solana and Polygon. The company also partnered with global payroll provider Remote to allow US-based businesses to pay global contractors in USDC.
In October, Stripe announced the acquisition of stablecoin startup Bridge Network for $1.1 billion.
In addition to the digital payment stalwarts, traditional businesses and institutions are also adopting stablecoins thanks to new regulatory frameworks in Europe and recent policy shifts in the US, said Boiron.
“Institutions are seeing the doors continue to open,” said Boiron. “We’re also seeing strong interest from non-crypto native businesses who recognize the revenue potential of stablecoins.”
What all these companies have in common is they see the “proven profitability demonstrated by established [stablecoin] players” and recognize the “opportunity to provide better payment rails for their users, especially for remittances, while avoiding traditional fee structures.”
Related: Stablecoin market cap surpasses $200B as USDC dominance rises
A $230-billion industry
Stablecoins have grown into a $230-billion industry supporting use cases across both developed and emerging economies. As a standalone figure, the value of stablecoins in circulation is equivalent to more than 1% of the US money supply, according to Polygon’s $0.02timmy.
Source: $0.02timmy
Tether’s USDt (USDT) is the largest stablecoin in circulation, accounting for more than 61% of the overall market, according to CoinMarketCap.
Tether is also one of the world’s most profitable businesses, generating $13 billion in net earnings in 2024 on the back of its massive US Treasury holdings.
Polygon’s proof-of-stake chain saw its stablecoin supplies jump 14% in the fourth quarter to surpass $2 billion, according to Boiron.
“Polygon PoS continues to be the leading [Ethereum Virtual Machine] chain with almost 30% of all app action transactions, meaning transactions beyond basic token operations like approvals, transfers and wrapping,” he said.
Recent innovations in stablecoins include the launch of 1Money, a layer-1 payments network that supports multicurrency transactions.
Yield-bearing stablecoins are also gaining traction, with the US Securities and Exchange Commission recently greenlighting Figure Markets’ YLDS, a dollar-pegged stablecoin that offers users a 3.85% annual percentage rate.
Meanwhile, Tether co-founder Reeve Collins recently announced plans to launch Pi Protocol, a decentralized stablecoin that offers yield.
“The most promising development may be yield-bearing stablecoins that combine the stability of traditional collateralization with DeFi yield,” said Boiron, who drew attention to Ondo Finance’s USDY.
Ondo’s USDY has more than $435 million in total value locked. Source: DefiLlama
Ondo’s so-called “yieldcoin” product is essentially a tokenized instrument that is secured by US Treasurys, giving non-US residents access to a stablecoin-like product earning a US-denominated yield. Currently, USDY allows users to earn up to 4.35% annual percentage yield on stablecoins such as USDC.
Magazine: Bitcoin payments are being undermined by centralized stablecoins
This article first appeared at Cointelegraph.com News
