The stablecoin market could reach $1.9 trillion, according to Citi projections, driving competition among traditional banks to capture share in a digital dollar ecosystem that poses a direct threat to conventional deposit bases.
Visa has achieved a $20 billion stablecoin settlement run rate. The payments giant's on-chain analytics show lending protocols have facilitated more than $694 billion in stablecoin-denominated loans since 2020, though this volume primarily circulates within crypto markets rather than extending to everyday payment programs.
Visa's initiatives include stablecoin prefunding through zerohash for its Visa Direct service and ongoing requests for proposals for settlement partners like BVNK.
A Federal Reserve staff paper indicates stablecoins can increase private sector usage and demand for Treasury bills without requiring central banks to allocate reserves. The analysis also notes stablecoins could inflate the perceived size of the U.S. money supply without generating new spending power.
The same Federal Reserve research highlights how network congestion and weak network effects can prompt stablecoin holders to seek redemptions or migrate to other chains, even when underlying assets are securely backed.
U.S. legislation has removed interest payment capabilities from stablecoins. A separate executive order prevents the Federal Reserve from issuing a central bank digital currency, positioning private, regulated stablecoins as America's digital dollar.
Globally, 21 banks have actively reshaped discussions surrounding stablecoins and tokenized deposits. Singapore is advancing toward establishing its own regulatory framework for stablecoins.
