Stablecoin settlements may surpass all major card networks in 2023: data
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Stablecoins play a very crucial role in the crypto economy today, and despite the recent decline in the broader market, stablecoin volumes continue to dominate most exchanges.
According to data from Coinmetrics, stablecoin settlements on the chain topped $7 trillion in 2022 and are expected to end the year at around $8 trillion. While the largest card network, Visa, processes around $12 trillion a year.
Peter Johnson, co-head of the company at Brevan Howard Digital, said that stablecoin settlements have already surpassed MasterCard and American Express. Furthermore, he predicted that the stablecoin volume on the chain will exceed the Visa transaction volume in 2023.
He also noted that stablecoin volume would exceed not just Visa, but most likely the combined volume of all four major card networks (Visa, Mastercard, AmEx, and Discover). Johnson added that these on-chain stablecoin volumes don’t include trading volume on centralized exchanges, which has a significant stake of its own.
3/ (Note that this is on-chain settlement volume only and does not include trading volume on centralized exchanges)
— Peter Johnson (@TheChicagoVC) December 21, 2022
While the comparison definitely indicates a significant increase in stablecoin usage, many users pointed out that the comparison between the two entities doesn’t hold water as they are two different things.
See also: US Stablecoin Regulations: A Beginner’s Guide
A distinction must be made between credit card volume and stablecoin billing. Credit card transactions are typically associated with consumer spending, while fiat-pegged crypto assets are mostly associated with crypto trading and decentralized finance.
Hmm, I’m sort of comparing apples and oranges. Mastercard/Discover etc. volumes come from consumer spending. Onchain volume comes from investor speculation.
This $7+tn would have to come from consumer goods/services payments with stablecoins to make a relevant comparison
— Kim ⚡️ (@0xKimberly) December 21, 2022
A major impediment to stablecoins being actively used by consumers in their daily lives, just like Visa and Mastercard, are regulations. However, Republican Senator Pat Toomey, who will leave the US Congress at the end of his term, wants to change that with his stablecoin bill. The bill would allow non-governmental and non-bank institutions to issue stablecoins as long as they receive a federal license, prepared and issued by the US Office of the Comptroller of the Currency (OCC), and backed by “senior high-quality liquid assets.”
In terms of market cap, stablecoins currently make up about 16.5% of the total. CoinGecko data shows that the combined value of all stablecoins is around $140 billion. Tether-issued USDT currently dominates the stablecoin market with a total supply of 66.3 billion USDT, followed by Circle’s USDC with a UDSC market supply of 44.3 billion.
