Stablecoins Emerge as the "Second Killer App" After Bitcoin, Tech Investor Chamath Palihapitiya Explains

Tech investor Chamath Palihapitiya highlighted the increasing dominance of stablecoins in the global financial system on Tuesday, deeming them one of the hottest cryptocurrency narratives besides Bitcoin BTC/USD.

What Happened: As part of his deep dive into the stablecoin market, Palihapitiya noted that stablecoins’ weekly transaction volumes have exceeded that of Visa Inc. V.

These findings were corroborated by a recent report by asset management firm Bitwise, which showed stablecoin transaction volumes overtaking the payments giant by 2024. In 2020, stablecoin volumes were 11% of total VISA volumes.

The dominance led Palihapitiya to call dollar-backed stablecoins, including Tether USDT/USD and USD Coin USDC/USD, the "second killer app" in the cryptocurrency space, next to Bitcoin.

"It's no secret that I've been a huge fan of stablecoins for a while now. In fact, I think they're one of the hottest crypto stories, second only to Bitcoin," Palihapitiya wrote in a post on X.

"Stablecoins are the second killer app in crypto. Bitcoin is the first, in my opinion."

Last year, Visa announced the launch of the Visa Tokenized Asset Platform, a new infrastructure designed to help banks issue and manage stablecoins and tokenized deposits.

This week, Stripe began testing a stablecoin pilot, aiming to help e-commerce businesses accept stablecoin payments.

Mastercard is also introducing new features that will enable consumers to spend stablecoins at any of the 80 million merchants worldwide who accept Mastercard.

"This is a big deal, and it's sure to have a major impact on the way we think about and use money in the years to come," Palihapitiya added.

Why It's Important: The rise of dollar-backed stablecoins has been a hot topic in the cryptocurrency world. According to a multinational bank, Standard Chartered, the total value of the stablecoin market is expected to surge from $230 billion today to $2 trillion by the end of 2028, potentially generating $1.6 trillion in additional demand for U.S. Treasury bills.

None other than President Donald Trump has called on Congress to pass stablecoin legislation, emphasizing the need for clear rules to foster innovation in the cryptocurrency sector.

The SEC has already stated that stablecoins fully backed by physical U.S. dollars or low-risk, short-term liquid instruments and redeemable at a 1:1 ratio with the U.S. dollar will be classified as "non-securities."

See More: Best Standard Chartered Credit Cardsincludes a REPORT: Stablecoin Transaction Volume Could Exceed Visa by 2024