Standard Chartered Bank report: Stable Coin is the first killer app, US friendly policies will help grow tenfold

In the digital age, Stable Coin (Stablecoins) is transitioning from a behind-the-scenes tool for Cryptocurrency transactions to a potential new star that is changing the global financial landscape. The report "Stablecoins: The First Killer App" jointly released by Standard Chartered Bank and Zodia Markets reveals how this digital asset is breaking through the limitations of TradFi, becoming a new engine for cross-border payments, savings, and financial inclusion. As the market continues to grow, the future of Stable Coin seems to be full of infinite possibilities, but its growth still needs to face regulatory and technological challenges.

What is Stablecoin? The new definition of digital assets

Stable Coin is a type of digital asset designed to maintain a stable value, usually pegged to national currencies like the dollar. Reports indicate that Stable Coin was initially used for trading and lending on centralized exchanges (CEX), but its role has now expanded significantly. From dollar savings to cross-border transfers, Stable Coin is gradually infiltrating the applications of TradFi (Traditional Finance). With a total market capitalization reaching $163 billion in October 2024 and $230.5 billion by February 2025, where Tether (USDT) accounts for 73% and USD Coin (USDC) accounts for 21%, Stable Coin has become an undeniable force in the digital economy.

Stablecoin market status: Ethereum and Tron's showdown

The technical basis of Stablecoin mainly relies on blockchain technology, with Ethereum being the preferred platform. However, reports show that due to the high transaction fees of Ethereum, Tron is gradually rising, especially with USDT's supply on Tron surpassing that on Ethereum, accounting for 50% of the total. This shift reflects the market's pursuit of cost-effectiveness and lays the foundation for its wider adoption.

Emerging Uses of Stablecoin: From Trading Tool to Financial Bridge

The application scenarios of stablecoin are rapidly evolving. According to the report "Stablecoins: The Emerging Market Story" (September 2024), in emerging markets such as Brazil, Turkey, and Nigeria, 69% of respondents use stablecoin as a replacement for coins, 39% use it for paying goods and services, and cross-border transfers. The report emphasizes that stablecoin is becoming a financial solution for the unbanked population, with approximately 1.4 billion people globally who do not have access to banking services potentially benefiting from it, with a potential transaction scale of up to $20 trillion.

The revolution of cross-border payment: Stable Coin challenges the traditional system

The G20 proposed in 2020 to improve cross-border payments with the goal of achieving faster and cheaper transactions. However, the progress of traditional correspondent banking systems and SWIFT has been slow, and costs and speed have not yet met the standards. Stablecoin provides cross-border transfer of US dollar assets at internet speed, especially filling the gap in emerging markets with declining correspondent banking networks. The report points out that this flexibility and transparency are driving Stablecoin to become a new choice for cross-border payments.

Non-USD Stablecoin: Potential New Star in the Foreign Exchange Market

Although currently 99.3% of Stablecoin is pegged to the US dollar, non-USD Stablecoins (such as the Turkish Lira Stablecoin) are quietly emerging. These Stablecoins are not only used to access overseas encryption exchanges but also support remittances and value transfers. The report believes that if non-USD Stablecoins further develop, they may become an alternative for foreign exchange transactions, breaking the absolute dominance of the US dollar in the Stablecoin market.

Future Outlook: Regulatory Opportunities for Tenfold Growth

Stable Coin currently accounts for only 1% of the US M2 coin supply and foreign exchange transactions, but reports predict that if the US passes a clear regulatory framework (such as the Trump administration may promote), its market size is expected to grow tenfold. Cross-border payments and non-dollar Stable Coin are seen as major growth points. However, achieving this goal requires overcoming legislative and technical barriers, and the legalization process of Stable Coin will be crucial.

Actual application: T+1 settlement and breakthrough of on-chain foreign exchange

The actual application of stablecoin has begun to show results. The T+1 stock settlement policy implemented in the United States in May 2024 has shortened the trading window. Stablecoin helps Asian investors overcome foreign exchange settlement restrictions and achieve 24/7 trading. In addition, the USDC/AUDD on-chain foreign exchange transactions demonstrated by Zodia Markets and Cumberland achieve same-day (T+0) settlement, breaking the time constraints of traditional foreign exchange, demonstrating the technical advantages of stablecoin.

Risks and Challenges: The Double-Edged Sword of New Technology

Stablecoin is not without risks. Citing analysis from S&P, the report points out that it involves credit, market, custody, and operational risks, similar to deposits and coin market funds. The lack of a mature regulatory framework may also affect market confidence. Institutions such as Standard Chartered Bank are assisting market participants in understanding and managing these risks through collaboration with Stablecoin issuers (such as Circle).

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