Wall Street bank JPMorgan Chase & Co. (JPM) said stablecoin supply could reach $500 billion to $600 billion by 2028, well below more bullish estimates of $2 trillion to $4 trillion.
Demand for stablecoins remains primarily a crypto market story, not a payments one, according to the largest US bank by assets.
JPMorgan noted that the stablecoin market has grown by around $100 billion this year to approximately $308 billion, led by Tether’s USDT and Circle’s USDC (CRCL).
Demand continues to be driven primarily by cryptocurrency trading and collateral needs in derivatives and decentralized finance (DeFi), with derivatives hubs adding around $20 billion in stablecoin holdings alongside an increase in perpetual futures activity, according to the report.
“The vast majority of demand for stablecoins comes from their use as cash or collateral in the crypto ecosystem to facilitate cryptocurrency trading, including derivatives trading, lending, and DeFi lending,” wrote analysts led by Nikolaos Panigirtzoglou, in Wednesday’s report.
Stablecoins are cryptocurrencies pegged to assets such as fiat currencies or gold, but most often to the US dollar. They underpin much of the cryptoeconomy, serving as payment gateways and a tool for moving money across borders.
Analysts said payments are a smaller driver today, but could grow as more providers test stablecoin-based Rails for cross-border transfers.
Still, the report says that broader use of payments does not automatically require a much larger stablecoin float because velocity, how quickly tokens circulate, can increase as integration deepens.
Banks and payment networks are also taking steps to protect their role in institutional flows through tokenized deposits and other blockchain initiatives, while Central Bank Digital Currency (CBDC) efforts could offer regulated alternatives that compete with private stablecoins, the report adds.
Read more: Stablecoin Adoption Is ‘Exploding’: Here’s Why Wall Street Is Going All In
