Citi anticipates that stablecoins will continue to be primarily denominated in U.S. dollars, while non-U.S. countries are more likely to adopt central bank digital currencies (CBDCs).
Investment banking giant Citigroup believes that regulatory shifts could serve as the key trigger for widespread adoption of stablecoins and blockchain technology in 2025.
“Regulatory changes could make 2025 blockchain’s ‘ChatGPT moment’ for adoption across the financial and public sectors,” Citigroup financial analysts wrote in an April 23 report.
With increasing regulatory backing and rising adoption by financial institutions, the stablecoin market cap could soar to $3.7 trillion by 2030, or reach $1.6 trillion in a more conservative scenario.
“Regulatory clarity in the U.S. may be the key driver for broader acceptance, potentially allowing stablecoins in particular—and blockchain technology in general—to become more integrated into the current financial system,” Citi stated in its report.
Following the inauguration of U.S. President Donald Trump’s crypto-friendly administration earlier this year, lawmakers are now considering stablecoin legislation like the GENIUS Act, which aims to regulate U.S. stablecoins and ensure their lawful use in payments.
According to the report, a U.S. regulatory framework for stablecoins would also boost demand for dollar-denominated risk-free assets both domestically and internationally.
“Stablecoin issuers will be required to back each coin with U.S. Treasuries or similarly low-risk assets to ensure secure underlying collateral,” Citi stated.
“By 2030, stablecoin issuers may end up holding more U.S. Treasuries than any individual country currently does,” the report noted.
Looking ahead, Citi forecasts that stablecoin supply will continue to be dominated by the U.S. dollar, while other countries will likely push for their own national currencies or central bank digital currencies.
As of April, the stablecoin market cap surpassed $230 billion, marking a 54% increase from the previous year, with Tether leading the way.
“Although the dollar’s dominance could shift over time—with national regulations possibly promoting the euro or other currencies—many non-U.S. policymakers may still see stablecoins as a tool reinforcing dollar hegemony,” Citi noted.
“With global geopolitics in flux, a continued shift toward a multi-polar world would likely drive policymakers in China and Europe to advance central bank digital currencies (CBDCs) or stablecoins denominated in their own currencies,” Citi stated.
However, the market still faces hurdles. If issues with adoption and integration continue, the stablecoin market cap could level off at around $500 billion.
Citi also highlighted depegging as a potential concern, noting 1,900 occurrences in 2023—including the significant USDC depeg after the collapse of Silicon Valley Bank.
“A significant depegging event could reduce crypto market liquidity, cause automated liquidations, hinder trading platforms’ redemption capabilities, and potentially lead to wider contagion across the financial system,” the firm warned.
.){kind=link}