Stablecoins Are Becoming More Systemically Important

Broker Bernstein reported in its research report that stablecoins have become more important to the global financial system and are the 18th largest holders of US Treasury bonds.

Stablecoins are a type of cryptocurrencies designed to have a fixed value and are usually pegged to the US dollar, although some other currencies and assets, such as gold, can also be used.

The report noted that stablecoin circulation returned to an all-time high of $170 billion after a drop in supply in 2023, and monthly payment volume on the chain tripled in the past 12 months, reaching $1.4 trillion in July.

“Stablecoins provide USD access to international users, taking digital dollars beyond the US,” wrote analysts led by Gautam Chhugani.

The report highlighted the increasing integration of stablecoins with payments and fintech companies such as PayPal (PYPL), MercadoLibre (MELI), and Grab (GRAB).

Bernstein noted that stablecoin holders residing outside the US are using these cryptos as a hedge of value against local currencies, with younger people increasingly choosing them. According to the report, 20% of 18-24 year olds in emerging markets have stablecoins as 25-50% of their portfolio.