Number of Stablecoin Holders Nears 100M Mark, Data Show

Stablecoins are hotter than ever. The number of addresses holding dollar and crypto-pegged stablecoins has increased 15% this year to above 93.6 million, the highest on record, according to data source rwa.xyz.

Stablecoins are cryptocurrencies with values pegged to an external reference, like the U.S. dollar. They can be broadly categorized as fiat-backed, crypto-backed, or algorithmic stablecoins. As of the time of writing, there are 35 stablecoins in existence, boasting a combined market capitalization of $157 billion.

Those holding Tether (USDT), boasting a massive industry market cap of $114.07 billion, represented approximately 80% of all stablecoin wallets. USDC and BUSD came in second place with the remaining shares.

During the 2022 crypto market downturn, the number of supposed holding addresses continued to grow. In response, the Federal Reserve quickly increased interest rates that year, leading investors to seek out the U.S. dollar and other dollar-backed cryptocurrencies as alternatives.

Additionally, the volume of addresses exchanging stablecoins has seen a significant surge over the past few years. In particular, in March, the number of active stablecoin addresses surpassed 26 million for the first time ever, according to rwa.xyz data.

Approximately 77% of the nearly 20 million addresses, or around eighteen million in total, can be attributed to TRON and Binance Smart Chain (BSC). This significant majority is indicative of active engagement from retail investors.

Looking closely at transfer amounts on Zoom, it becomes clear that although TRON and BSC have a smaller number of active addresses, they handle a minor percentage of total transaction volumes. This suggests that these two platforms are favored by retail investors. (OurNetwork’s April 23 edition)

The decclaimed transfer volume was significantly contributed by Ethereum, the leading smart contract blockchain globally, along with its competitor Solana, owing to their extensive decentralized finance environments.

Stablecoin use cases

According to a 2022 report released by the Federal Reserve, stablecoins have various potential uses such as facilitating cross-border transactions, processing internal funds transfer within organizations, and managing liquidity within businesses.

In addition, a sole stablecoin can have distinct functions based on the jurisdiction. For example, in countries like Zimbabwe and Nigeria with high inflation rates, stablecoins function as substitutes for traditional payment methods, remittances, and valuable assets. Conversely, in economically advanced nations, stablecoins are frequently employed to finance cryptocurrency transactions.

“This agreement allows USDT to be integrated onto Telegram’s blockchain, enabling over 900 million Telegram users to utilize Tether directly.” (Note: The exact number of Telegram users may vary)

Regulation is the key

Based on the assessment of rating agency S&P, regulatory certainty is expected to prompt banks to utilize stablecoins. Recently, Senators Cynthia Lummis (R-Wyo.) and Kirsten Gillibrand (D-N.Y.) unveiled a bipartisan bill totaling 179 pages aimed at regulating the use of stablecoins in the US.

If the bill gets passed and appropriate banking regulations are implemented, the new rules could give banks an edge in competition by restricting unlicensed institutions to issue a maximum of $10 billion, according to S&P.

The Securities and Exchange Commission (S&P) stated that under the proposed legislation, Tether (USDT), being issued by a non-American entity, would not be considered a legal payment stablecoin. Consequently, this restriction implies that US entities will be prohibited from dealing or keeping tether. As a result, tether’s popularity might decrease, and users may opt for US-issued stablecoins instead.