Stablecoin On-Chain Settlement May Surpass That of Visa in 2023

The crypto market has seen a massive drop this year, but stablecoin usage and adoption are still on the rise.

Despite the fact that crypto markets crashed by more than 70% in 2022, stablecoin adoption has increased rapidly. CoinMetrics estimates that the total value settled by them in 2021 will be slightly more than $6 trillion. The value settled in 2022 could exceed $8 trillion, if not more.

Peter Johnson, co-head of venture at Brevan Howard Digital, compared stablecoin settlements to those of major credit cards on December 21.

Stablecoin settlements had already surpassed MasterCard and American Express, he said. Furthermore, he predicted that next year, on-chain stablecoin volumes would surpass Visa’s.

“By 2023, on-chain stablecoin volumes will outnumber Visa’s largest card network.”

Johnson predicts that stablecoin volumes will “likely exceed the aggregate volume of all four major card networks (Visa, Mastercard, AmEx, and Discover)” next year.

There is, however, a distinction between credit card volumes and stablecoin settlements. Credit card transactions are typically associated with consumer spending, whereas fiat-pegged crypto assets are primarily associated with crypto trading and decentralised finance.

With that in mind, the surge in stablecoin settlement volumes is even more impressive. That volume will skyrocket once they are regulated and can be used for payments.

Stablecoins currently account for approximately 16.5% of the total cryptocurrency market capitalization. According to CoinGecko, the total value of all of them is $140 billion.

Tether remains the market leader, with 47% market share and 66.3 billion USDT in circulation. Circle comes in second with a 31% market share and 44.3 billion in UDSC. Together, the pair accounts for nearly 80% of the stablecoin market. However, as the bear market bites deeper this year, both have seen their circulating supply decrease.

Senator Pat Toomey, a pro-crypto Republican, has submitted a stablecoin trust bill as his final act before retiring. “I hope this framework lays the groundwork for my colleagues to pass legislation next year safeguarding customer funds without inhibiting innovation,” he said on December 21.

The bill proposes that licenced entities such as money transmitters and banks be authorised to issue them. It also wishes to repeal the onerous reporting requirements and classify stablecoins as non-securities.

Furthermore, it is far more constructive than Elizabeth Warren’s regulatory ideas. The bill intends to make all financial privacy illegal and to require nodes and validators to register as “financial institutions.” Senator Sherrod Brown has gone so far as to suggest that the entire asset class be prohibited in the United States.