P Xenos and M Bacina
Stablecoins soar in on-chain volume and transactions
Despite regular criticism of stablecoins by government and regulatory officials due to their perceived risk to the existing financial landscape, a recent TradeBlock report has found that the aggregate total on-chain transfer volume across the five largest stablecoins is now greater than Venmo’s (a mobile payment service owned by PayPal) total payment volume. Stablecoins address the volatility concerns which have plagued most decentralised cryptocurrencies, but carry their own risks, particularly in the case of the much maligned Tether.
This ongoing growth in volume is in the context of concerns by member of the Board of Governors of the Federal Reserve Lael Brainard, who recently said in relation to stablecoin payment networks that they will impose:
Important challenges and risks related to financial stability, monetary policy, safeguards against money laundering and terrorist financing, and consumer and investor protection
As shown below, although Venmo’s total payment volume rose along the trendline, as expected every quarter, stablecoin transaction volume, as an aggregate of all stablecoins has increased exponentially.
Rafael Cosman, Co-Founder, and Head of Engineering of TrustToken, stated that Facebook’s Libra project, despite facing strong regulatory headwinds, has opened “all kinds of doors” for the use of stablecoins, and will not only find more and more use cases within the crypto markets, but within the conventional market as well.
In conversation with Abra Founder and CEO Bill Barhydt, in the latest edition of Abra Money 3.0, said:
stablecoins may start to be used under the hood in more places, let’s say in payment apps, that are international payments using stablecoins and the user might not even realize they are using stablecoin.
Throughout 2019, various large organisations have begun to accelerate the development and deployment of their own stablecoins. Earlier this year, JP Morgan launched its own stablecoin, which was built on the firm’s private, permissioned blockchain, Quorum.
Even President Trump's former pick for the Federal Reserve, Stephen Moore, formally announced plans to release his own stablecoin (the Frax) which will be pegged to the U.S. dollar.
As central banks around the world continue to take note of international stablecoin proposals, it appears that it is only a matter of time until a developed economy decides to issue a central bank digital currency, almost certainly in the form of a cryptographic stablecoin.