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Stablecoin usage drops in the US as demand grows abroad

Stablecoin usage drops in the US as demand grows abroad

GrafaGrafa2024/10/18 03:05
By:Isaac Francis

Stablecoin usage in the U.S. has seen a notable decline in 2024, while demand has surged in developing countries, according to a recent Chainalysis report released on October 17. 

The report highlights that stablecoin transactions on U.S. exchanges dropped from 50% in 2023 to below 40% in 2024. 

In contrast, exchanges outside the U.S. now handle over 60% of stablecoin transactions, signaling a significant shift in global markets. 

Although the report does not show a sharp fall in U.S. usage, it underscores the rapid growth of stablecoins in emerging economies, where U.S. dollar-backed assets are increasingly used due to lower transaction costs and the need for value preservation. 

Countries like Turkey have experienced heightened demand for stablecoins, driven by economic instability and the search for more stable assets. 

This trend is also fueled by the availability of U.S. dollars outside the U.S., with around half of the $1 trillion U.S. banknotes in circulation held in other countries, according to the Federal Reserve. 

Emerging markets are increasingly turning to U.S. dollar-backed stablecoins for cross-border transactions and as a hedge against local currency devaluation. 

Regulatory uncertainty in the U.S. is another factor contributing to the decline in domestic stablecoin use. 

The lack of a clear regulatory framework for stablecoins is threatening the country’s leadership in the market. 

Circle, a leading stablecoin company, has voiced concerns that regions like Europe and the UAE are becoming more attractive for stablecoin projects due to their clearer regulatory environments. 

A Circle spokesperson noted, “The absence of a regulatory framework for dollar-referenced stablecoins poses a threat to American interests.” 

The Chainalysis report emphasises the need for the U.S. to address regulatory gaps to maintain its leadership, as the global stablecoin market is expected to continue expanding rapidly.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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