The global stablecoin market has reached a new milestone in terms of supply, with the figure climbing to $301.5 billion, according to recent data. Binance has become a significant catalyst of the liquidity boom, amid the decrease of its ERC-20 supply of stablecoins from 42 billion to 32 billion in August.
This is the largest on-chain stablecoin reserves ever recorded in the exchange. The jump indicates that the trading activity on Binance is still strong, and the number of users and the liquidity demand are both on the rise. Although there has been some rotation out of volatile assets into stablecoins, the surge in Binance reserves indicates that users are still engaged and not totally risk-averse.
Institutional stablecoin demand on the rise amid US dollar exposure
Stablecoins have become an important intersection between traditional finance and digital assets. JPMorgan analysts project up to $1.4 trillion of extra demand in US dollars if overseas investors keep adding exposure to these assets as global adoption expands by 2027. “Whether such a high-end scenario growth trajectory will actually play out remains to be seen, but if it does, stablecoin-related dollar inflows could become cumulatively significant,” JPM said.
The analysts further noted, “Given that ~99% of the total stablecoin supply is pegged 1:1 to the dollar, stablecoin market growth necessarily implies some demand for the dollar.” The forecast shows the extended utility of stablecoins outside of crypto trading. Their use in cross-border transactions, remittances, and on-chain settlements is also on the rise, considering they are faster and cheaper options than regular payment systems.
Meanwhile, Switzerland is heading towards becoming a formalized global innovation hub for stablecoins. The Swiss Federal Department of Finance is working on changing the legislation to promote blockchain-based payment systems. The Swiss stablecoin roundtable on October 10 brought together policymakers, business executives, and researchers to discuss the development of digital currencies.
Respondents explored the role of stablecoins that may be used in addition to regulated payment infrastructure to improve efficiency and market access. National Councilor Benjamin Fischer highlighted the desire of Switzerland as a power broker in digital finance by being pragmatically regulated and supported in its innovations. The financial sector of Spain is also experiencing significant changes. Santander has joined nine other global banks, including Bank of America and Goldman Sachs, in a stablecoin pilot.
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