Adoption of stablecoins by US-based consumers will slow in 2024 despite increased activity in Bitcoin, which gained popularity following the launch of the Spot Bitcoin Exchange Traded Fund facing.
The chart below shows that trading through US-regulated platforms has declined in just under a year. This can be attributed to the increasing challenges surrounding the domestic regulation and adoption of US-based stablecoins.
This shows the growing adoption of emerging market stablecoins based outside the US. As the use of stablecoins increases globally, these types of digital assets are being used to transport value and conduct cheap transactions in every corner of the world.
Percentage of stablecoin inflows to US regulated exchanges and non-US regulated exchanges. Source: Chainalysis
Global demand for USD-backed assets
Stablecoins can help strengthen global financial inclusion, especially in regions where stable currencies are few or even exist, as countries seek a more stable asset base, usually in the form of the dollar. Masu. This need for reliable and well-stored assets drives the use of stablecoins.
As of today, the market capitalization of cryptocurrencies stands at $2.26 trillion. Chart: TradingView.com
By the end of 2022, it has been observed that about $1 trillion of US dollars will have been found overseas, roughly equivalent to about half of the total US dollar supply, leaving markets prone to local currency instability. further highlights how stablecoins are poised to replace dollar cash. .
Image: Built-in
This result is in line with the words of Tether CEO Paolo Ardoino, who recently stated that demand for stablecoins primarily comes from developing countries such as Argentina, Turkey, and Vietnam. In these regions, people are looking for stablecoins to protect against inflation and currency erosion, and are therefore increasingly using stablecoins as financial products for daily business and deposit purposes.
Stablecoins: Regulatory challenges and the US position
The lack of an adequate framework for digital assets puts the United States at a competitive disadvantage. Financial hubs in Europe and the United Arab Emirates are attracting stablecoin projects due to their much friendlier regulatory environments. According to Chainalysis, companies like Circle point out that the lack of a U.S. regulatory framework for stablecoins could pose a threat to U.S. interests.
More countries are coming forward to set clear guidelines to encourage the use of stablecoins, and the United States is not left behind in the call to action. Chainalysis believes that this regulatory gap is likely to keep the country competitive in the emerging digital asset environment and will be a catalyst for innovation in the stablecoin market.
Featured images from Pexels, charts from TradingView
