Visa Stirs Controversy with Claims that Stablecoin Transactions ‘Inorganic’

By Ben Knight May 07, 2024 In Stablecoins, Visa
Krakow, Poland - April 29 2022: Visa plastic credit payment cards with Bitcoin coin
  • Payment giant Visa has teamed up with Allium Labs to analyse the origins of stablecoin transactions across the crypto industry.
  • The report found that less than 10% of trades were “organic”, meaning that bots still dominate the DeFi sector.
  • Experts believe that true mainstream adoption of stablecoins may still be the path forward, however the revolution is still likely quite a long way away.

Visa has slammed the crypto industry in a stunning report that shows over 90% of stablecoin transactions are made by bots. Stablecoins have been front-and-centre of late, with high transfer volumes spurring the belief that DeFi ecosystems are experiencing hefty growth. 

The news puts a damper on the belief that USD-pegged stablecoins – and tokenisation in general – are ramping up their influence over the finance sector.

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A study performed by Visa in conjunction with Allium Labs found approximately USD $2.2T (AUD $3.32T) worth of stablecoin transactions were made in April 2024. Of this trillion-dollar figure, less than 10% ($149B [AUD $224B]) came from “organic” activity – aka humans. 

Source:Visa, Allium Labs via Bloomberg

Visa is one of several payment giants (alongside Stripe and Paypal) that have entered the crypto sector of late. In particular, these companies have targeted the benefits of stablecoins to the traditional financial systems. 

However, if Visa and Allium Labs’ figures are accurate, it shows that perhaps stablecoins have a ways to go before the industry can start touting their widespread adoption.

A spokesperson from payment solution Airwallex, Pranav Sood, spoke to the significance of the data.

It says that stablecoins are still in a very nascent moment in their evolution as a payment instrument.

Pranav Sood, Airwallex

He went on to emphasise that many in the world are still stuck in the “old ways” of managing finance.

It’s important to remember that in the US, people are still using checks to pay for…between 40% and 60% of business payments, which gives you a sense of where the market really is in terms of technological adoption.

Pranav Sood, Airwallex

Although the research suggests stablecoins have some way to go, they are on the right track. Bot activity is prevalent through all financial industries – algorithms can perform actions more efficiently, consistently and frequently than humans.

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And the volume of money flowing through DeFi is still quite high, despite accusations of wash trading against projects like USDC and Tether USD

Ben Knight

Ben Knight

Ben Knight is a writer and editor from Melbourne with a passion for all things music and finance. He enjoys turning complex topics – especially the technical details of cryptocurrency – into digestible bites that anybody can understand. He acquired his Master’s in Writing, Editing and Publishing from RMIT in 2019 and has run his own creative writing business ever since.

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