Citi ( C ) said stablecoins have risen in line with the broader crypto market since the GENIUS Act was passed in July, prompting its analysts to raise their 2030 market cap outlook to $1.9 trillion last month.
Stablecoins remain the primary path to crypto and have consistently accounted for 5%-10% of total market capitalization, the bank said in the report on Friday.
The bank’s analysts expect short-term growth to move in step with the broader market for digital assets.
Stablecoins are cryptocurrencies whose value is tied to another asset, such as the US dollar or gold. They play a major role in the cryptocurrency markets and they provide a payment infrastructure and are also used to transfer money internationally. Tethers USDT is the largest stablecoin followed by Circles USDC.
Citi argued that the effect on bank deposits is likely to be modest. While funding costs and lending appetite could change, the report drew a parallel to the rise of money market funds in the 1980s, which did not significantly disrupt overall lending.
The stablecoin boom has revived activity on the Ethereum blockchain, but analysts warned that this dominance could fade as issuers develop their own networks.
Network effects may maintain blockchain’s position for now, but it is no longer guaranteed.
The bank sees the main driver behind stablecoin adoption as their “store of value” role in emerging markets facing inflation or weak institutions. That could fuel further demand for dollar assets, but could also trigger policy responses to limit dollarization. Payments, on the other hand, remain a niche use case with mostly small transactions.
The dollar continues to dominate the market, although euro-denominated stablecoins are gaining ground from a small base. New rules in Hong Kong highlight how regulation outside the US could reshape the landscape, the report said.
Read more: Stablecoins rise to register a market capitalization of 314 billion. USD as institutional race heats up: Canaccord
