Stablecoins are rapidly moving from niche products to core payment infrastructure, according to asset management giant DWS.
With a combined market capitalization exceeding $250 billion and trading volumes surpassing Visa (V) and Mastercard (MA), they have become liquid, globally traded assets favored by institutions, DWS said in last week’s report.
Euro stablecoins set new benchmarks for efficiency and acceptance, according to the report.
Stablecoins are cryptocurrencies whose value is tied to another asset, such as the US dollar or gold. They play a major role in cryptocurrency markets, providing payment infrastructure, and are also used to transfer money internationally.
The German investment manager sees regulation such as the European Markets in Crypto-Asset (MiCA) regulation as driving adoption, while increasing liquidity and interoperability make stablecoins an integral part of B2B banking, treasury and payment systems. This integration could unlock new use cases, from mass payments to automated settlements.
Risks nevertheless remain, the DWS said. These include reserve transparency, issuer confidence and regulatory changes.
“Stablecoins illustrate the transformation of the financial system by combining stability and innovation, as well as efficiency and security,” said Alexander Bechtel, global head of digital strategy, products and solutions at DWS; in the report.
Learn more: Stablecoin rise could trigger $1 trillion outflow from emerging market banks: Standard Chartered
