Global Bank Citi has predicted that 2025 could be a possible bending point for blockchain adoption powered by stableecoins, similar to the breakout artificial intelligence (AI) had with the popular application chat.
“2025 has the potential to be blockchain’s ‘Chatgpt’ moment,” the bank’s analysts said in a report published earlier this week.
In the middle of Citi’s projection is stableecoins, a class of cryptocurrencies linked to traditional currencies like the US dollar. These symbols led by Tether’s $ 145 billion USDT and Circle’s $ 60 billion USDC, have seen huge growth recently and is increasingly used for payments and transfers globally.
Citi sees the asset class potentially grow to $ 1.6 trillion by 2030 in its basic case from the current $ 230 billion, with the warning that regulatory support and institutional integration are grabbing. In the bank’s more optimistic scenario, the market could balloos to $ 3.7 trillion, although lingering structural challenges could keep the number closer to $ 500 billion in the bank’s bears.
A larger catalyst is the supportive legislative position in the United States, with a recent presidential executive order directing the formation of a federal framework for digital assets, the report said. The clarity of the stableecoin rules could enable these symbols to be more deeply embedded in the financial system, which offers faster payments, improved transparency and more efficient asset settlement.
“This can lead to greater adoption of blockchain-based money and spur other use cases, economic and beyond, in the US private and public sectors,” the authors remarked.
StableCOin -Issues to become large US Treasury
Stableecoins are expected to remain strongly dollar-denominated in the future. The report expects about 90% of stableecoins in circulation by 2030 to still be tied to the US dollar and cement its dominance.
This has major consequences for the global financial system. Dollar StableCOin issuers could become one of the largest buyers of US treasuries, provided the rules are pushing against backing toiles with low-risk, very liquid traditional financial assets as government bonds. Citibank estimated issuers could have $ 1.2 trillion in US government debt at the end of the decade, potentially surpassing all major foreign sovereign holders.
Meanwhile, central banks in countries in Europe and Asia are likely to promote their own digital currencies or CBDCs, the report noted.
The report pointed to several risks that could inhibit growth. Stableecoin’s depth nearly 1,900 times in 2023 alone, including more than 600 cases involving larger tokens, the report’s authors wrote and cited Moody’s data.
In extreme cases, mass redemptions – such as those following the collapse of Silicon Valley Bank (SVB), which consequently hit USDC – can disrupt crypto liquidity, forcing automated sales and ripening through financial markets, the authors added.
