The buzz around stablecoins is reaching a fever pitch.The market is expected to hit $500 billion in just a few months.But the success also brings risk.<\/p>\n
A version of this article appeared in our The Roundup<\/a> newsletter on September 26. Sign up<\/a> here.<\/p>\n Hey all, Eric<\/a> here!<\/p>\n Stablecoins are about to go gangbusters.<\/p>\n Having just crossed<\/a> the $295 billion mark, the global stablecoin market is just months away from breaking through the $500 billion barrier. <\/p>\n That\u2019s according to Colin Butler, global head of financing at stablecoin investment firm Mega Matrix.<\/p>\n Based on the market\u2019s average 12% three-month growth, he told DL News it will hit $500 billion \u201csometime in 2026.\u201d<\/p>\n And momentum will only build after that. <\/p>\n Crypto exchange Coinbase forecasts that the market will reach $1 trillion by 2028. Standard Chartered<\/a> puts<\/a> it at $2 trillion by 2029. And Citi expects<\/a> it to clear the $4 trillion mark by 2030. <\/p>\n Add to that the fact that leading stablecoin issuer Tether is reportedly in talks to raise<\/a> $20 billion at a $500 billion valuation \u2014 putting it in the rarefied ranks of tech giants like OpenAI and SpaceX \u2014 and the buzz around stablecoins becomes overwhelming. <\/p>\n A combination of events is fuelling that bullishness. <\/p>\n Crypto-friendly regulations have incentivised institutional players to ramp up their digital asset plans, including incorporating stablecoins into their business, either by launching dollar-pegged tokens of their own or by folding in existing ones into their services. <\/p>\n \u201cAnother key factor is the growth of onchain trading, DeFi, and remittances, where stablecoins are the preferred settlement unit,\u201d Christian Harris, chief analyst at Investing.co.uk, told DL News. <\/p>\n The success of stablecoins also comes with risks. <\/p>\n \u201cAny event that results in a depeg of coins and results in consumer harm would result in reputational risk for the stablecoin industry, and puncture this growth,\u201d Nithya Sridharan, digital assets product director at TP ICAP, told DL News.<\/p>\n Let\u2019s not forget the cascade of crypto company collapses that followed in Terra\u2019s depeg<\/a> in 2022.<\/p>\n US banking groups have warned<\/a> that some provisions in the Genius Act run the risk of draining them of some $6 trillion worth of deposits.<\/p>\n Brian Armstrong, Coinbase\u2019s CEO, has rejected<\/a> those claims. <\/p>\n In nations where dollar-pegged tokens are popular because of local currency instability, stablecoins could undermine central banks\u2019 ability to control inflation, Cristiano Ventricelli, VP and senior analyst of digital assets at Moody\u2019s Ratings, told DL News. <\/p>\n \u201cShould a USD-linked stablecoin fail, it could significantly erode domestic savings denominated in such stablecoins,\u201d Ventricelli said.<\/p>\n And then there are always central bank digital currencies. Only a handful of CBDCs have gone live<\/a> and US President Donald Trump has banned<\/a> the formation of a digital dollar. <\/p>\n Even so, \u201cif there\u2019s more adoption they have the potential to partially displace private stablecoins,\u201d Harris said.<\/p>\n Kraken\u2019s co-CEO sat down with DL News and discussed a public float, acquisitions and the crypto exchange\u2019s strategy to fight off fintech and industry-native rivals.<\/p>\n The US housing market is primed for a blockchain update, Etherealize CEO Vivek Raman told Liam Kelly<\/a>.<\/p>\n