SUMMARY
- Regulatory uncertainty and rising demand for USD-backed stablecoins are driving growth in markets outside the US.
- While Bitcoin activity in the US surged with the launch of spot BTC ETFs, stablecoin adoption has slowed in 2024, Chainalysis reported on Oct. 17.
The United States has seen record Bitcoin movement since the launch of spot BTC exchange-traded funds (ETFs). Nonetheless, stablecoin adoption in the US has moderated in 2024 compared to global markets, as detailed by Chainalysis on Oct. 17. The report highlights that stablecoin transactions on US-regulated exchanges fell from 50% in 2023 to below 40% in 2024. In contrast, non-US platforms presently handle over 60% of these transactions.
This shift does not demonstrate a steep decline in US stablecoin use but focuses on the developing role of stablecoins in emerging markets. Numerous countries presently depend on stablecoins backed by the US dollar for savings and affordable transfers. Chainalysis found that demand for these resources has surged globally, with developing economies like Argentina, Turkey, and Vietnam driving adoption endeavors, according to Tether’s CEO Paolo Ardoino.
One reason for this slant is that numerous nations confront restricted access to steady currencies, inciting them to turn to dollar-backed stablecoins. The US Federal Reserve evaluated that as of late 2022, roughly $1 trillion in US dollar banknotes, or half of the total supply, was held outside the nation, reflecting the global craving for the dollar as a store of value.
Regulatory instability in the US further undermines its position as a stablecoin pioneer. Chainalysis noted that the absence of clear rules for stablecoins has permitted regions like Europe and the UAE to attract more crypto projects. A Circle spokesperson cautioned that this lack of a regulatory system risks undermining US interests, as firms gravitate toward financial hubs with clearer rules.
As other countries advance regulatory endeavors, US policymakers are under increasing pressure to create a stablecoin system. Without quick action, the US may lose its competitive edge in the developing stablecoin economy. The advancing global scene emphasizes the need for regulatory clarity to support leadership in the digital resource market and capitalize on the growing stablecoin sector.