Citigroup Predicts $3.7 Trillion Stablecoin Market by 2030

Citigroup, through its research organization Citi Institute, has predicted that the global stablecoin market could reach as high as $3.7 trillion by 2030. This projection is part of a broader analysis that acknowledges both the potential and the risks associated with stablecoins. The report, titled “Digital Dollars,” highlights the growing integration of stablecoins with the US dollar, which is seen as a key driver for long-term growth. According to Artem Korenyuk, a managing director at Citi, stablecoins are becoming major holders of US Treasuries, influencing global financial flows. This trend reflects a sustained demand for US dollar-denominated assets.

The report also emphasizes the importance of regulatory mandates that require stablecoin issuers to hold reserves of US Treasuries. This regulatory framework is expected to cause issuers to become significant holders of Treasury bonds, thereby integrating stablecoins more deeply with the traditional financial ecosystem. Despite the potential threat stablecoins pose to traditional banking, these regulations are likely to encourage a cooperative model between the two sectors. Public sector spending on blockchain technology is also expected to support this dynamic.

However, the report does not overlook the risks. While the most bullish estimate for the stablecoin market by 2030 is $3.7 trillion, the bearish scenario is only $0.5 trillion. The significant spread between these estimates underscores the uncertainties in the market. Key risks include fraud, contagion from de-pegging events, and confidentiality concerns. These factors could hinder the growth of stablecoins and impact their integration into the global financial system.

Citigroup’s involvement with cryptocurrencies dates back several years, and the institution has been continually publishing research on the market. This long-standing interest in the sector underscores the bank’s commitment to understanding and navigating the evolving landscape of digital currencies. The report’s optimistic outlook, coupled with a recognition of potential risks, provides a balanced view of the stablecoin market’s future prospects.