Chamath Palihapitiya Highlights the Rising Dominance of Stablecoins in the Global Financial System

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

"1) Weekly STB txn vol > Visa. (cc @BitwiseInvest)

2) Union Bank says total STB mkt cap expected to hit $2tr by ’28 (vs $230bn today), creating $1.6tr in add’l demand for U.S. Treasury bills.

3) Trump calls on Congress to pass STB legislation.

4) SEC says STB fully backed by physical U.S. dollar or low-risk, short-term liquid instruments and redeemable at a 1:1 ratio with the U.S. dollar will be classed as "non-securities."

5) Visa launched the Visa Tokenized Asset Platform to help banks issue and manage stablecoins and tokenized deposits.

6) Stripe is piloting stablecoins to help e-commerce merchants accept crypto payments.

7) Mastercard is rolling out new features that will enable consumers to spend stablecoins at any of the 80 million merchants that accept the Top 2 card network.

8) A few more tidbits in the post. Thoughts?" Palihapitiya said in a post on X, formerly Twitter.

These findings were corroborated by asset management firm Bitwise, which recently unveiled that stablecoin transaction volumes are outpacing the payments giant, a projection for 2024. In 2020, stablecoin volumes were 11% of the total VOLUME for VISA.

Palihapitiya went on to describe dollar-backed stablecoins, such as Tether USDT/USD and USD Coin USDC/USD, as the "second killer app" in the cryptocurrency sphere, ranking them second only to Bitcoin.

"I'm not surprised that people are hot on the stablecoin narrative. It's certainly one of the more interesting macroeconomic narratives to follow in crypto right now. Here's a deeper look at the STB market, covering some key developments and stats that highlight its growth and potential, " the tech investor added.

This year, President Donald Trump called on Congress to pass stablecoin legislation, highlighting 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.”

Earlier this year, multinational bank Standard Chartered predicted that 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.

Moreover, highlighting the integration of stablecoins into mainstream financial services, Visa announced the launch of the Visa Tokenized Asset Platform last year. The platform is designed to provide banks with the technology and framework to issue and manage both stablecoins and tokenized deposits.

This week, Stripe also announced that it is piloting stablecoins with the aim of helping e-commerce merchants accept crypto payments through its platform.

Finally, Mastercard is rolling out new features that will enable consumers to spend stablecoins at any of the 80 million merchants that accept the Top 2 card network.

The move will expand the use cases for stablecoins and provide a seamless experience for consumers who wish to use their crypto holdings for everyday purchases.

The integration of stablecoins into mainstream financial services, highlighted by the actions of major institutions like Visa, Stripe, and Mastercard, signals the increasing acceptance and mainstream appeal of digital assets.

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