Stablecoins still 1% of US money supply, forex market, but experts predict 10x growth

With a current market capitalization of less than $200 billion, stablecoins represent a tiny fraction of global financial transactions: just 1% of US forex and forex trades.

However, a joint report from Standard Chartered and Zodia Markets research suggests significant growth potential, with experts projecting a 10% expansion in US money supply (M2) and foreign exchange (FX) transactions.

Regulation could unlock the full potential of stablecoins

According to the report titled “Stablecoins: The First Killer App,” the utility of stablecoins has evolved far beyond their original role in cryptocurrency trading. Initially used as a bridge asset for trade, stablecoins are increasingly used in cross-border payments, payroll, trade settlements and remittances.

These applications demonstrate their ability to address inefficiencies in existing financial systems, such as high costs, delayed transaction times, and limited accessibility in underserved regions. By offering faster and cheaper transactions, stablecoins offer a compelling solution for international remittances and trade operations, positioning themselves as a fundamental tool in modern finance.

The analysis also highlighted the implications of the adoption of stablecoins for the wider financial ecosystem. Currently, the total stablecoin market cap is dwarfed by the $21 trillion US M2 and $2.1 trillion in daily spot forex transactions. However, achieving a 10% share could transform them into a dominant force in global finance, reshaping the landscape of digital payments and settlements.

Regulation is seen as the key to this transition. While previous US administrations have made little progress in establishing specific stablecoin policies, the report suggests that a Trump-led administration in 2025 could prioritize such efforts. Indeed, this regulatory clarity is expected to unlock the full potential of stablecoins, allowing them to further scale and diversify their use cases.

Stablecoin adoption soars in emerging markets

Geographically, USD-backed stablecoins dominate the market, accounting for 99.3% of the current stablecoin market cap. Tether (USDT) leads with a market share of 73%, followed by Circle’s USD Coin (USDC) with 21%.

Meanwhile, Standard Chartered’s report on Thursday cited a YouGov survey that found compelling use cases. In five emerging markets (Brazil, Turkey, Nigeria, India and Indonesia), it was observed that 69% of respondents use stablecoins for currency replacement, while 39% use them for cross-border payments and goods transactions and services

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