Stablecoins Poised to Outpace Visa in Transaction Volume, Visa's Crypto Chief Disputes
Summary:
Research firm Sacra speculates that stablecoins might surpass payment giant Visa in overall transaction volume this quarter, with potential to handle over $4 trillion in total payments. This prediction is due to stablecoins' efficiency in international money transfers. However, Visa's crypto chief, Cuy Sheffield, disputes this claim, citing that many stablecoin transactions are bot-related and do not truly reflect traditional settlement trends. Meanwhile, other payment companies are venturing into the stablecoin industry, despite current market leaders like Tether (USDT) and Circle’s USD Coin (USDC) dominating the space.
There is speculation that stablecoins might outperform payment behemoth Visa in overall transaction volume this quarter, as per analytics company Sacra’s report. Visa's crypto lead, on the other hand, begs to differ. Sacra co-founder Jan-Erik Asplund suggests that stablecoins, given their exceptional compatibility with international money transfers, might surpass Visa by handling over $4 trillion in total payments volume. Asplund hails stablecoins for their promptness, availability 24/7, and low cost vis-à-vis traditional banking procedures. He goes on to mention that major banks are now incorporating stablecoins to enhance their payment infrastructures.
Contrarily, Cuy Sheffield, who heads crypto at Visa, argues that data on stablecoin are often skewed with loads of irrelevant data points including automated bot-related transactions that do not truly reflect traditional settlement phenomena. Visa's freshly released dashboard indicates that up to 90% of stablecoin transactions in the past month may have come from non-human users. It was found that of the $2.2 trillion stablecoin transactions in April, less than 10% ($149 billion) was genuine human activity as per Visa's metric, with the majority being bot activity or automated transactions done by centralized exchanges.
In collaboration with Allium Labs, Visa has recently designed a recalibrated metric to quantify stablecoin transactions which seeks to negate distortions arising from non-organic or artificially inflated activities. This dashboard uses two filters on its data: one slicing through single-directional volume that counts only the greatest stablecoin amount in one transaction, and another seeking to eliminate automated and bot-related transactions from large-scale entities such as centralized exchanges.
Irrespective of the type of transactions, the dashboard has reported a sharp rise, nearly doubling, in total monthly stablecoin transaction volume since early 2024, primarily constituting Tether (USDT) and Circle’s USD Coin (USDC).
Despite this, other payment giants are exploring the stablecoin space. PayPal introduced its PYUSD stablecoin in 2023, and Stripe announced plans to let its platform's merchants accept stablecoins for online transactions in April. Also, Ripple voiced plans to launch a stablecoin backed by the USD, putting them in direct competition with dominant market players. As per CoinGecko's report, the stablecoin market has approximately $161 billion in capitalization and a daily transaction volume of $37 billion.
Visa's response to this development and further comments from leading stablecoin issuer Tether on the matter are still awaited.
Published At
5/6/2024 7:34:08 AM
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