After 5 years of working in crypto, I've seen the good, the bad, and the revolutionary. I am finally starting to write about it. This blog will continue to focus on macroeconomics and investing, but if you are open to hearing about the world of blockchain (where I focus professionally as a strategist) please consider subscribing to my other blog (here).
But crypto does have a macroeconomic angle. Consider stablecoins—cryptocurrencies designed to maintain a stable value relative to a reference asset (U.S. dollar). They merge the reliability of fiat currencies with the innovation of blockchain technology. While their current market capitalization of $173 billion represents only a small fraction of global financial assets, their rapid growth and integration into mainstream financial services is notable.
Consider this:
Integration with Major Financial Institutions: Companies like PayPal, Visa, Robinhood, and JPMorgan are incorporating stablecoins into their services, bridging the gap between traditional finance and the digital economy. The involvement of established financial institutions and companies could accelerate adoption, bring legitimacy, and influence regulatory frameworks for stablecoins.
Real-World Impact: Stablecoins are being used to provide aid in conflict zones, facilitate remittances, and offer financial services in regions with limited banking infrastructure. This month alone, stablecoins logged $1.5 trillion in volume (higher than the approximately $1.3 trillion of 30-day settlement volume for Visa). On an adjusted basis (excluding high-frequency trading and bots), stablecoins settled $427 billion in volume.
Reinforcing the U.S. Dollar: By embedding the dollar within blockchain ecosystems, stablecoins are extending its dominance into the digital realm. Stablecoin issuers hold more than $120 billion in U.S. Treasury notes (reserve assets), surpassing holdings of countries like Germany and South Korea.
If stablecoins continue on this trajectory, they could approach a market cap of $1 trillion in the coming years, becoming systemically important to global finance and the U.S.
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