Stablecoins play an increasingly important role in both crypto markets and traditional funding, according to a Wall Street Giant Citigroup Friday report.
As stableecoin use grows, their demand for short-term US treasuries, although substitution from money market funds can limit the net effect, the report said.
Legislation considered in Congress could further anchor this trend by requiring reserves to be held in card-dated government debt, the bank noted.
Citi said the US dollar dominance in the stablecoin issue reflects its status as the global reserve currency rather than running it.
Dollar-backed stableecoins as USDT remains dominant, driven by their central role in crypto trading and blockchain-based payments, the bank said.
Meanwhile, new players such as PayPal (PYPL) and Visa (V) are also experimenting with stablecoin use cases, Citi said.
The potential market is significant, $ 1.6- $ 3.7 trillion by 2030, according to CITI, but regulatory restrictions, such as dividend restrictions, may be growth in growth.
Still, StableCOin issues could provide insight into the evolving global monetary order, the report added.
Read more: US StableCOin Bill Authorization could trigger a long-term crypto bull market: Bitwise
