A recent report by Citigroup’s Future of Finance think tank has revealed that stablecoins are on the brink of a major transformation and could go from on-chain trading tools in crypto trading to crucial components of the global financial system.
Citigroup: Stablecoin Powers the Future of Global Finance
Citi predicts that within the next five years, stablecoins will extend their role into everyday banking, remittances, and institutional finance. Their growing presence may even reduce the demand for holding physical US dollars or Euros overseas and could eventually contribute to the liquidity reserves of commercial banks.
Ronit Ghose, Citi’s Global Head of Future of Finance, emphasized the potential impact, “Stablecoins could soon serve as the cash leg in transactions involving tokenized financial assets. They also present a low-cost, accessible way for individuals around the world to hold dollars or euros digitally.”
Currently, the global stablecoin market is valued at around $240 billion, dominated by Tether’s USDT at $145 billion and Circle’s USDC at $60 billion. But Citi expects the market to soar. Their base-case projection estimates growth to $1.6 trillion by 2030, and in a more optimistic scenario, stablecoins could reach $3.7 trillion—rivaling the current size of the entire crypto market.
The shift in stablecoin usage is already underway. Michael Shaulov, CEO of crypto infrastructure firm Fireblocks, reported that payment companies (once minor players) are quickly adopting stablecoins. These firms now account for 16% of stablecoin activity on the platform and are experiencing quarter-over-quarter volume growth of over 30%. In the past three months, payment firms processed $82 billion in stablecoin transactions via Fireblocks, a 38.2% increase from the previous quarter.
Meanwhile, Citi continues to explore how stablecoins might coexist or compete with central bank digital currencies (CBDCs), which are often viewed by crypto purists as antithetical to decentralized finance. Ghose likened the tension to Star Wars, where CBDCs play the role of the ‘Empire’ and stablecoins represent the rebellious innovation of Luke Skywalker.
Fireblocks CEO Michael Shaulov also echoed similar thoughts, as he claimed, “Payment companies are leveraging stablecoins for a variety of pure-play payment flows, including cross-border transfer, remittance, merchant settlements and others,” “Payment companies represent 11% of all of our clients, but 16% of the overall stablecoin transactions with over 30% growth of Q/Q in volumes. It is likely that this growth will continue, and they will represent 50% of the stablecoin volume within 12 months.”
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