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Citi Report Highlights Stablecoins’ Role in Strengthening US Dollar
- A Citi Wealth report indicates that stablecoins are strengthening the role of the US dollar as world reserve currency.
- The report also highlights that the vast majority of crypto volume comes from stablecoins, which in turn are mostly USD-denominated.
- Stablecoins are increasing in popularity, with Binance and Circle teaming up and Ripple releasing its RLUSD stablecoin.
According to a recent report by Citi Wealth, stablecoins might challenge the idea that Bitcoin and Co can threaten US dollar supremacy. In fact, the authors argue that US dollar-backed stablecoins can actually increase the dollar’s role as the world’s reserve currency.
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Originally, cryptocurrencies such as bitcoin were conceived as rivals to central bank–issued currencies. Indeed, some believed – and continue to believe – that bitcoin might end the U.S. dollar’s hegemony.
Citi Wealth Stablecoins Responsible for 80% of Crypto Volume, 93% Denominated in USD
The analysts further wrote that stablecoins with their large trading volume – around 80% of the total crypto trading volume – “are challenging that narrative”.
Stablecoins which are pegged to USD, such as USDT and USDC, by far outweigh alternative options. As per CoinGecko, the top 20 stablecoins are all USD-pegged coins, look outside the top ten market cap and trading volume (indicating actual use) drops dramatically.
The authors say that 93% of stablecoins are USD dominated and mostly issued by companies which “maintain reserves of dollars, U.S. Treasuries, repurchase agreements and money market funds as backing”.
The report continues to mention that stablecoins have even overtaken Visa in volume in 2024, which has caused the credit card provider to launch its own stablecoin projects.
Since their inception in 2014, stablecoins have amassed nearly $180bn in market capitalization, much of that in the last five years. Activity has reached record highs, with $5.5 trillion in value across the first quarter of 2024. By comparison, Visa saw about $3.9 trillion in volume.
Citi Wealth Pro-Crypto Trump Could Further Boost USD Dominance
With a pro-crypto Donald Trump returning to the White House soon, the report suggests a positive regulatory approach to stablecoins could further strengthen the US dollar.
The U.S. House of Representatives may vote on an act that aims to introduce a regulatory framework for these assets. While such initiatives aim to protect investors and preserve financial stability, greater regulatory clarity could also potentially further boost their appeal.
Citi Wealth So, instead of weakening the dollar’s stance, the authors conclude that this could enhance the accessibility of US dollars worldwide and reinforce the longstanding global dominance of the US currency.
In other developments, USDC issuer Circle and crypto exchange Binance have just announced that they will work together on USDC expansion.
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At Abu Dhabi Finance Week they said Binance will make USDC “more extensively available across their full suite of products and services, ensuring that their more than 240 million global users are able to seamlessly access and use USDC for trading, saving, and payments applications”.
Ripple recently also got approval for its stablecoin RLUSD, which Tron’s Justin Sun seems to be happy to host on the blockchain.
Author
Aaron Feuerstein
Aaron Feuerstein is a freelance writer based in Melbourne. His focus is on decentralised finance and the regulatory space surrounding blockchain. He holds a Master's in Accounting. When he is not studying the latest legal case, he enjoys his time as a modest but eager hobby cook.
