Today’s Crypto For Advisor Bulletin comes to you from the Toronto consensus. Energy is high since policy formulators, leaders and influential digital assets meet to talk about Bitcoin, Blockchain, regulation, AI and much more!
Attend consensus? Visit the Coendesk stand, #2513. If you are interested in contributing to this newsletter, Kim Klemballa will be in the stand today, May 15, from 3 to 5 pm est. You can also respond directly to this email.
In today’s cryptographic for the advisors, Harvey Li of Tokenization Insights explains Stablecoins, where they came and their growth.
Then, Trevor Koverko de Sapien answers questions about the state of Stablecoin’s regulations and adoption with regulations in Europe in Ask an Expert.
Thanks to our sponsor of this week’s newsletter, Grayscale. For financial advisors near Chicago, Grayscale is organizing an exclusive event, Crypto Connect, on Thursday, May 22. Get more information.
– Sarah Morton
Stablecoins – Past, present and future
When the main financial institutions, from Citi and Standard, rent to Brevan Howard, McKinsey and BCG, they recover around an innovation once a niche, it is a good idea to take note, especially when innovation is Stablecoins, a tokenized representation of money in the chain.
What email was to the Internet, Stablecoin is blockchain: instant and profitable value transfer on a global scale that runs 24/7. Stablecoin is the first case of Blockchain murderer use.
A brief story
Entted for the first time by Tether in 2015 and acclaimed as the first stablcoin, USDT offered the first cryptography users a way of maintaining and transferring a stable value and called in dollars in the chain. Until then, his only alternative was Bitcoin.
Stablecoin backed by Tether’s dollar made his debut in Bitfinex before quickly extending to the main exchanges such as Binance and OKX. It quickly became the predetermined negotiation pair throughout the digital asset ecosystem.
As adoption grew, so did its usefulness. It is no longer just a negotiation tool, Stablecoin emerged as the main equivalent in cash, cash management and payments.
Below is the trajectory of the size of the Stablecoin market from the beginning, a reflection of its evolution of a cryptographic niche to a central pillar of digital finance.
Use at scale
The reason why Stablecoins has been a hot topic in finance is its rapid adoption and growth. According to Visa, the stablecoin chain transaction volume exceeded $ 5.5 billion in 2024. Compared, the visa volume was $ 13.2 billion, while Mastercard transacted $ 9.7 billion during the same period.
Why such proliferation? Because the stable cash called dollars is the soul for the entire digital asset ecosystem. Here are 3 main use cases for Stablecoin.
IMPORTANT USE CASES
1. Commerce of digital assets
Given its origins, it is not surprising that the trade was the first case of important use of Stablecoin. What began as a niche tool for the preservation of value in 2015 is now the heart of the negotiation of digital assets. Today, Stablecoins supports more than $ 30 billion in annual negotiation volume in centralized exchanges, which promotes the vast majority of spot activity and derivatives.
But the impact of Stablecoin does not end with centralized exchanges: it is also the spine of liquidity of decentralized finances (Defi). Ochain merchants need the same reliable cash equivalent to move inside and outside the positions. A look at the main decentralized platforms, such as Uniswap, Pancakeswap and Hyperliquid, shows that upper commercial pairs are consistently called by Stablecoins.
The monthly decentralized exchange volumes routinely reached $ 100-200 billion, according to the block, further consolidating the role of Stablecoin as the fundamental layer of the modern market of digital assets.
2. Real world assets
Real world assets (RWAS) are tokenized versions of traditional instruments such as ties and actions. Once a marginal idea, RWAS are now among the fastest growing assets classes in Crypto.
Leading this wave is the US Treasury market. Uu. Tokenized, which now has more than $ 6 billion AUM. Throwed in early 2023, these treasure bonds in the chain opened the door so that the native cryptographic capital access the performance of invoices in the United States of low risk and short duration.
The adoption saw an amazing growth of 6,000% according to Rwa.XYZ: only $ 100 million in early 2023 to more than $ 6 billion AUM today.
Heavy asset management weights such as Blackrock, Franklin Templeton and Fidelity (the pending approval of the SEC) are creating chain treasury products for digital capital markets.
Unlike traditional treasure bonds, these digital versions offer mint/instantaneous reimbursements 24 hours a day, 7 days a week, and perfect compositional with other definition performance opportunities. Investors can subscribe and redeem all day, with the liquidity of Stablecoin delivered in real time. The circle facilities with the integration of Blackrock and Paypal with Ousg de Ondo are only two outstanding examples.
3. Payment
An important emerging use case for Stablecoins is cross -border payment, especially in runners disregarded by traditional financial infrastructure.
In much of the world, international payments remain slow, expensive and error -prone due to the dependence of the correspondent banking. On the contrary, Stablecoins offers merchants and consumers an alternative with their instant transfers, low cost and always on. According to an A16z investigation, the stable payments are 99.99% cheaper and 99.99% faster than traditional wire transfers and set 24 hours, 7 days a week.
The change is also gaining impulse in the West. The Bridge’s acquisition of Stripe of $ 1 billion and the subsequent introduction of the Stablecoin financial account indicates the start of conventional global adoption. Meanwhile, PayPal’s performance deployment in Pyusd’s balances highlights the increase in Stablecoin as a vertical legitimate retail payment.
What was once a crypto-native solution is quickly becoming a global financial utility.
– Harvey Li, founder, tokenization insight
Ask an expert
Q. In the light of the recent news from Europe with respect to Stablecoins and Tether, can you explain how Stablecoin’s investment is valuable for an individual?
TO. In the inherently volatile and highly risky world of cryptocurrencies, the stables provide people with an efficient form of obtaining exposure to digital assets. Aimed at fiduciary currencies such as the euro or basic products such as gold, these digital assets provide stability and coverage against Crypto’s volatility. Cryptographic people can park their funds safely in Stablecoins in times of uncertainty without having to leave the market and deal with tradfi.
That is why Stablecoins dominate cryptography. Its combined market capitalization has exceeded $ 245BLN, a mass growth of 15 times in the last five years.
Q. Given the current market trends in Europe, are stablcoins more or less susceptible to market fluctuations?
TO. While the established ones are inherently less volatile than typical cryptography assets, they remain sensitive to regulatory developments and the credibility of the issuer. When it comes to Europe, specifically, the stables have become less susceptible to market fluctuations due to strict regulatory measures.
This includes the implementation of the markets in the regulation of cryptographic assets (MICA), which provides a clear legal framework that requires that Stablecoin issues maintain adequate reserves and comply with strict governance standards. These rules reduce the risk of breaking down and improving general stability. However, this leads to market consolidation, lack of competition and reduced innovation at the same time.
Q. Europe is becoming a new Stablecoin center as it becomes more receptive to cryptography?
TO. Europe has been pointing out a friendly approach to cryptography through Mica, the first worldwide comprehensive cryptographic framework that introduces license requirements for digital asset services and AML protocols. The objective is to create a structured and harmonized regulatory environment for the cryptographic market, protect customers and guarantee financial stability.
Through its MICA evolution regulations, Europe could certainly improve institutional trust and attract more stable issues. However, that would require overcoming license problems (a long and expensive process), effective implementation at the national level and adapting to the cryptographic space of rapid progress.
Currently, Europe is not a world leader in the adoption of Stablecoin, but with the clearest rules in its place and its opening for the entities they meet, it is well positioned to arise as a key center for the stablecoin establishment innovation.
– Trevor Koverko, co -founder, sapien
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