Today’s **Crypto for Advisor** newsletter is buzzing with excitement from **Consensus Toronto**. Industry leaders, **policy makers**, and influencers gather to delve into pressing topics like **bitcoin**, **blockchain**, **regulation**, **AI**, and much more! It’s an event where conversations spark innovation and collaboration.
If you’re attending **Consensus**, don’t miss out on visiting the **CoinDesk booth, #2513**. For those interested in contributing to this newsletter, **Kim Klemballa** will be present today, **May 15, from 3-5 pm EST**. You are welcome to reply to this email directly for more information.
In this edition of **Crypto for Advisors**, we feature insights from **Harvey Li** of **Tokenization Insights**, who explains the evolution of **stablecoins**, their origins, and recent trends. Following that, **Trevor Koverko** from **Sapien** addresses questions regarding the current landscape of stablecoin **regulations** and adoption in Europe during our **Ask an Expert** segment.
We extend our gratitude to this week’s newsletter sponsor, **Grayscale**. Specifically for financial advisors near **Chicago**, **Grayscale** is hosting an exclusive event, **Crypto Connect**, on **Thursday, May 22**. Learn more about it here.
– Sarah Morton
Stablecoins – Past, Present and Future
When major financial institutions, including **Citi**, **Standard Chartered**, and prominent consulting firms like **McKinsey** and **BCG**, rally around a niche innovation, it’s crucial to take note. **Stablecoins**, a tokenized **representation of money** on the blockchain, are precisely that innovation.
Much like email revolutionized the **Internet**, stablecoins are transforming blockchain, enabling **instant**, **cost-effective value transfers** on a **global scale**, operating 24/7. Stablecoin adoption is often cited as **blockchain’s first killer use case**.
A Brief History
Launched by **Tether** in 2015, **USDT** became the first stablecoin, providing early crypto users the ability to hold and transfer value pegged to the **U.S. dollar** on-chain. Prior to USDT, the only alternative was **bitcoin**.
Tether made its debut on **Bitfinex**, quickly expanding to major exchanges such as **Binance** and **OKX**. It became the default trading pair across the digital asset ecosystem, marking its importance in crypto **trading**.
As **adoption** increased, so too did utility. Stablecoins transcended being mere trading tools, evolving into a core cash-equivalent for trading, cash management, and payments.
Usage at Scale
The surge in adoption is noteworthy, with **Visa** reporting that the on-chain transaction volume for stablecoins exceeded **$5.5 trillion** in 2024. In that same time frame, **Visa** and **Mastercard** processed **$13.2 trillion** and **$9.7 trillion**, respectively.
This remarkable growth is attributed to the fact that stable, dollar-pegged cash is crucial for the entire **digital assets ecosystem**. Below, we explore three major use cases of stablecoins:
1. Digital Assets Trading
Initially designed for value preservation, stablecoins have evolved into the backbone of **digital asset trading**. Currently, they underpin over **$30 trillion** in yearly trading volume across centralized exchanges, facilitating the vast majority of spot and derivatives activities.
Moreover, their importance extends to **decentralized finance (DeFi)**, where on-chain traders frequently rely on stablecoins for liquidity and efficient transactions. This has resulted in monthly decentralized exchange volumes reaching **$100-200 billion**.
2. Real World Assets
Tokenized versions of traditional assets, such as bonds and equities, known as **Real-World Assets (RWAs)**, are rapidly gaining traction. The tokenized U.S. Treasury market, for instance, exceeded **$6 billion** in assets under management (AUM), showcasing substantial growth.
Notably, heavyweight asset management firms, including **BlackRock** and **Fidelity**, are developing on-chain treasury products, allowing crypto-native capital to tap into low-risk, short-duration yields.
3. Payments
One of the most promising use cases for stablecoins lies in **cross-border payments**. With traditional international payment systems often slow and costly, stablecoins offer a viable alternative, enabling instant, low-cost transactions. Research from **a16z** revealed that stablecoins are **99.99% cheaper** and **99.99% faster** than conventional wire transfers.
This trend is extending to mainstream financial services, as evidenced by **Stripe**’s recent acquisition of **Bridge** and **PayPal**’s integration of yield features for **PYUSD** balances, marking a significant shift towards global adoption.
– Harvey Li, founder, Tokenization Insights
Ask an Expert
Q. In light of recent news regarding stablecoins and Tether, how valuable is stablecoin investment to individuals?
A. Stablecoins offer individuals a capital-efficient means to gain exposure to digital assets amid the **volatile crypto landscape**. Being pegged to fiat currencies, they provide stability, acting as a **hedge** against market fluctuations. This allows investors to keep their funds secure during uncertain periods without exiting the market.
That’s why stablecoins dominate, having achieved a combined market cap exceeding **$245 billion**, reflecting a **15x growth** over the past five years.
Q. Given current market trends in Europe, are stablecoins more or less susceptible to market fluctuations?
A. While stablecoins are generally less volatile than traditional crypto assets, they are still influenced by regulatory developments and issuer credibility. Recent regulations provide clearer standards and risk-reduction measures, leading to improved stability.
This dynamic could lead to market consolidation and a decrease in competition, however, creating a structured environment for stablecoin growth.
Q. Is a new stablecoin hub emerging in Europe?
A. Europe’s friendly stance toward crypto through **MiCA** presents an opportunity for clearer regulations, increasing institutional confidence. While Europe isn’t yet a global leader in stablecoin adoption, improving regulatory frameworks position it to become a key player in compliant stablecoin innovations.
– **Trevor Koverko**, co-founder, Sapien