In 2025, changes in regulations could be the catalyst for the critical adoption of stubcoin and blockchain technology in 2025, according to investment banking giant Citigroup.
“2025 could be a blockchain 'chat' moment of recruitment in the financial and public sector driven by regulatory changes,” a team of Citigroup financial analysts said in a report on April 23.
The combination of increased regulatory support and adoption by financial institutions has led to Stablecoin's market capitalization to either $3.7 trillion by 2030 or $1.6 trillion in the base case.
“The main catalyst for their greater acceptance could be the clarity of US regulations, which could specifically integrate the ridiculous integration into existing financial systems and enable blockchain more broadly,” Citi said in the report.
“The tailwinds of regulatory support and the increased integration of digital assets into current financial institutions set a scene of increasing steady usage.”
Shortly after President Donald Trump's code-friendly administration, assuming power earlier this year, lawmakers are weighing stable laws, such as the genius law that seeks to regulate US stability, ensuring legal use of payments.
According to the report, Stablecoin's US regulatory framework also supports the demand for dollar-free assets both within and outside the US.
“Stablecoin issuers must purchase US financial or comparable low-risk assets for each Stablecoin as a measure that has a secure underlying collateral,” Citi said.
“Stablecoin publishers could potentially hold more US Treasury by 2030 than they would today's single jurisdiction.”
The US continues to control stubcoin
In the future, Citi predicts that Stablecoin supply will continue to control the US dollar, with non-US promoting domestic or central bank digital currencies.
In April, Stablecoin's market capitalization exceeded $230 billion, up 54% from last year, with Tether (USDT) and USDC (USDC) controlling 90% of the market.
“Dolence control can evolve over time, and while the euro and other currencies are being promoted by state regulations, stubcoins could be viewed by many non-US policymakers as a tool of dollar hegemony,” Citi said.
“Geopolitics remains fluid. If the world continues to drift into multipolar systems, policymakers in China and Europe may be keen to promote stubcoins issued in the central bank's digital currency (CBDC) or their own currency.”
Related: The official float country of the Russian Ministry of Finance makes its own stubcoin: Report
However, there are still some challenges in the market. If “recruitment and integration challenges persist,” Stablecoin's market capitalization could settle at around $500 billion.
The dropouts as a potential issue with 1,900 instances in 2023, including the major USDC DEPEG after the collapse of Sisicon Valley Bank, have also flagged it as a potential issue.
“Major escape events can weaken the liquidity of the crypto market, cause automated liquidation, and undermine the ability of the redemption platform to meet redemption, potentially resulting in broader contagion effects from the financial system,” the company said.
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