FameEX Hot Topics | Might Stablecoin Volumes Exceed Visa Transactions This Quarter?

This quarter, stablecoins are on the verge of surpassing Visa in total payment volume, potentially reaching over $4 trillion, according to Jan-Erik Asplund, co-founder of research firm Sacra. In his blog post, Asplund argues that stablecoins offer significant advantages for cross-border transactions that might allow them to exceed the volumes handled by the payment giant.

Asplund emphasizes the superior convenience, speed, and cost-efficiency of stablecoins. Unlike conventional payment systems that operate primarily during business hours, stablecoins can process cross-border payments any day of the week, and these transactions are typically completed in minutes instead of the usual 6 to 9 hours. Furthermore, the cost associated with stablecoin transactions is markedly lower, at $0.0037, compared to an average of $12 for Visa transactions. Highlighting the adoption trends, Asplund noted, "Today every major bank is working on using stablecoins to run their payment rails behind the scenes." Despite these advantages, Cuy Sheffield, Visa’s head of crypto, casts doubts on these claims. Sheffield argues that the reliability of stablecoin data is compromised by a large volume of inorganic transactions involving bots and automated programs, which he believes do not represent traditional financial settlement processes.

Visa’s newly introduced dashboard reports that as much as 90% of stablecoin transactions in the last 30 days might not involve genuine users. According to the company's April data, out of the reported $2.2 trillion in stablecoin transactions, only about $149 billion are considered genuine, with the remainder largely consisting of bot activities and automated transactions by entities like centralized exchanges.

To address these issues, Visa has partnered with Allium Labs to develop an adjusted metric for stablecoin transactions. Launched in late April, this metric employs a single directional volume filter and an inorganic user filter, aiming to exclude bot activity and automatic transactions and provide a clearer picture of genuine  transactions. Despite these adjustments, the total volume of stablecoin transactions, irrespective of their nature, has almost doubled since the start of 2024, with a significant portion involving Tether. The payment industry continues to explore the utility of stablecoins, with PayPal launching its PYUSD stablecoin in 2023, and Stripe allowing merchants to accept stablecoins for online transactions starting April. Additionally, Ripple announced its plans to launch a U.S. dollar-backed stablecoin, intending to compete with market leaders.

CoinGecko reports that the market capitalization for stablecoins is currently around $161 billion, with a daily trading volume of $37 billion, underscoring a strong and expanding presence in the digital currency market.

Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.