J.P. Morgan Cuts Stablecoin Market Forecast 50% by 2028 Due to Regulatory Hurdles

J.P. Morgan has revised its growth expectations for the stablecoin market, predicting it will reach $500 billion by 2028, a significant reduction from previous projections that suggested the market could hit $1 trillion. The bank attributes this scaled-down forecast to the limited adoption of stablecoins outside of crypto trading and the slow progress in regulatory frameworks.

Despite growing interest from financial institutions, stablecoins remain predominantly used within digital asset markets. According to J.P. Morgan, only 6% of stablecoin activity is tied to payments, with the rest concentrated in crypto trading, decentralized finance (DeFi), and as collateral. This indicates that while there is interest from fintech firms and banks, these efforts have not yet shifted the balance towards broader public use.

The current total stablecoin market is estimated to be around $250 billion, including various dollar-pegged tokens used on exchanges and in blockchain ecosystems. However, the limited movement into mainstream commerce suggests that stablecoins are far from replacing traditional money. Previous forecasts from other financial institutions, such as Standard Chartered and Bernstein, had suggested more optimistic scenarios, with projections of $2 trillion and $4 trillion by 2028, respectively. J.P. Morgan, however, remains cautious, citing regulatory barriers and the lack of real-world utility as key constraints.

Fragmented global regulation continues to pose a significant challenge to the growth of the stablecoin market. Differing approaches to stablecoins across jurisdictions hinder global expansion. Many countries are focusing on their central bank digital currencies or improving existing payment systems, rather than embracing stablecoins. For instance, China is advancing the digital yuan for cross-border use, while Ant Group has plans to enter the stablecoin space. Despite these developments, J.P. Morgan believes these models do not offer a clear roadmap for global stablecoin adoption.

Legislative efforts are gaining momentum, with the recent passage of the GENIUS Act in the U.S. Senate marking a step toward regulatory clarity. Analysts believe such measures could eventually open the door for stablecoins to expand beyond crypto-focused use. However, J.P. Morgan remains firm in its position that mainstream stablecoin use is not yet close, emphasizing that current market growth is driven by speculative demand and crypto-native applications, not broad-based financial integration.