The stablecoin market is projected to grow to a scale of up to 500 trillion yen by 2030, according to Citi's growth scenario.

## Outlook on the Future of the Stablecoin Market

Citi’s research division released a report on the 23rd titled “Blockchain and Digital Dollar.” They predict that the stablecoin market will reach between $0.5 trillion and $3.7 trillion by 2030.

The factors contributing to the expansion of the stablecoin market are mainly the following.

• Some of the dollar holdings in the US and abroad will be replaced with stablecoin.
• A portion of the short-term liquidity in US dollars held by households and businesses in the US and abroad will be allocated to stablecoins for convenience (24/7, international transactions, etc.)
• The growth of the cryptocurrency market where stablecoins are used for settlement and as intermediaries with fiat currencies.

Due to these factors, the market size of stablecoins in 2030 is forecasted to be 1.6 trillion dollars (approximately 229 trillion yen) in the basic scenario, 3.7 trillion dollars (approximately 529 trillion yen) in the bullish scenario, and 0.5 trillion dollars (approximately 71 trillion yen) in the bearish scenario.

The report suggested that if permitted by regulations, stablecoins could potentially serve as an alternative to some yield-bearing assets.

In this regard, the current stablecoin bill being advanced in both houses of the U.S. Congress stipulates that those providing yields are excluded from the definition of “payment stablecoins,” so attention is focused on the developments.

The report also predicted that in both the base scenario and the bullish scenario for 2030, the stablecoin market will continue to maintain about a 90% share of the US dollar.

What is a stablecoin

Refers to a type of cryptocurrency whose price remains consistently stable. Stablecoins are a type of crypto asset that aim to maintain their value backed by currencies like the US dollar, unlike volatile assets such as BTC, ETH, and XRP. In addition to USDT and USDC, which are backed by the US dollar, there are also stablecoins that utilize algorithms.

Elements leading to a bullish scenario include favorable regulations in major regions such as Europe, North America, sub-Saharan Africa, and Latin America, broad trust in the soundness of stablecoin reserves, and technologies that bridge old and new infrastructures.

On the other hand, factors for a bearish scenario include mentioning geopolitical factors, resistance to digital dollarization, and the widespread adoption of CBDC (Central Bank Digital Currency) as an alternative to stablecoins.

In a bearish scenario, the use of stablecoins is expected to be limited to the cryptocurrency ecosystem and certain international payments.

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A report by Citigroup stated that the advancement of the regulatory framework for stablecoins in the United States could promote new demand for U.S. Treasury bonds. It suggests that by 2030, stablecoin issuers could become major holders of U.S. Treasury bonds.

Currently, various issuers, including Tether, which provides the market-leading US dollar-denominated stablecoin USDT, are holding US Treasury bonds as reserve assets.

As of October last year, Tether holds approximately $100 billion (around 14 trillion yen) in U.S. Treasury bonds as a major part of its reserve assets. As of April to June last year, the company’s holdings of U.S. Treasury bonds surpassed those of Germany, the United Arab Emirates, and Australia, ranking 18th globally among all nations.

The company is also generating significant earnings from the yields of the large holdings of U.S. Treasury bonds.