Originally published on: November 27, 2024
Stablecoins are making waves in the world of online commerce, but their potential is still largely untapped, with only a small fraction of global transactions utilizing them. A recent report published by strategy consultancy Quinlan & Associates and blockchain developer IDA highlights this issue, pointing out the scarcity of stablecoins pegged to currencies other than the USD.
According to the report, cryptocurrencies, including stablecoins, currently represent just 0.2% of global e-commerce transaction value. However, with their programmability, cost efficiency, transparency, and faster processing capabilities, stablecoins offer unique advantages that traditional financial systems cannot match.
Despite these benefits, the report notes that stablecoin adoption remains limited to the Web3 ecosystem due to regulatory uncertainties and the lack of non-USD stablecoin options. In fact, 81% of merchants cite regulatory uncertainty as the primary barrier to accepting stablecoins as a mainstream payment option.
With a majority of countries not using the USD as their official currency and a significant portion of international payments conducted in non-USD currencies, there is a clear need for stablecoins pegged to other currencies. Currently, stablecoins pegged to the USD dominate the market, with Tether’s USDt and USD Coin leading the pack.
In an effort to address this gap, IDA plans to launch a stablecoin pegged to the Hong Kong dollar, facilitating payments between Hong Kong and global markets. The potential for non-USD stablecoins to spur global adoption is evident, as they could provide a much-needed alternative for merchants and consumers around the world.
Additionally, the increasing demand for short-term US Treasury securities, known as Treasury bills, can be attributed to the growth of stablecoins. This trend has caught the attention of regulators, with discussions around stablecoin regulations expected to gain momentum in the coming years.
As the world of stablecoins continues to evolve, it is clear that non-USD stablecoins could play a crucial role in driving global adoption and reshaping the traditional financial landscape. Stay tuned for more updates on this exciting development.