As a crypto investor with a few years of experience under my belt, I’m keeping a close eye on the developing story between stablecoins and payment giants like Visa. The recent research from Sacra suggesting that stablecoins could surpass Visa in total payment volume this quarter is intriguing, but I remain skeptical based on the information provided.
According to research firm Sacra, stablecoins could potentially surpass payment volume achievements of industry leader Visa during the current quarter.
Visa’s head of crypto, however, disagrees.
According to a blog post penned by Sacra’s co-founder Jan-Erik Asplund, the company contends that stablecoins boast an exceptional match between supply and demand for cross-border transactions. This alignment could potentially lead to a staggering payments volume surpassing the $4 trillion mark presently handled by Visa.
As a financial analyst, I’d argue that stablecoins provide several advantages over traditional methods for cross-border transactions. They enable instantaneous payments, unlike business days which may take up to 6 to 9 hours. Moreover, the cost of using stablecoins is significantly lower than the standard $12 fee for such transactions. Specifically, you’d only pay a minimal fee of around $0.0037.
“Major banks are actively exploring the use of stablecoins to power their payment systems,” he continued.
According to Visa’s crypto head Cuy Sheffield, there is much confusion surrounding stablecoin data. In his view, transactions generated by bots and automated programs, which are common in the stablecoin market, do not truly represent traditional settlement processes.
As a researcher examining Visa’s newly introduced dashboard data, I discovered that approximately 90% of the transactions involving stablecoins over the past month can be classified as potentially non-genuine user activities.
Approximately $2.2 trillion worth of stablecoin transactions occurred in April. But only around 10%, or roughly $220 billion, have been identified as authentic by the credit firm. The remaining $1.98 trillion is attributed to automated and bot activities from entities like centralized exchanges.
In late April, Visa teamed up with Allium Labs to create a new metric for tracking stablecoin transactions on Visa’s dashboard. This adjustment was announced by both companies in April.
As a cryptocurrency investor, I would interpret this statement as follows: “The company’s dashboard explains that this revised measurement is designed to eliminate any misleading effects caused by unnatural market activities and deceptive price boosting tactics.”
The dashboard employs two types of filters for its stablecoin data: a volume filter focusing on one-directional transactions, which records the largest amount transferred within a single transaction, and an inorganic user filter designed to exclude automated transactions and suspected bot activity from major entities such as centralized exchanges.
The dashboard indicates that the monthly stablecoin transaction volume, including both legitimate and questionable transactions, has nearly doubled since early 2024. A large portion of this increased activity can be attributed to Tether (USDT) and Circle’s USD Coin (USDC).
At the same time, other prominent payment companies have joined the trend. PayPal introduced its PYUSD stablecoin in the year 2023, while Stripe announced merchants on its platform could accept stablecoins for digital transactions as of April.
As a crypto investor, I’ve noticed that in April, Ripple unveiled its intention to enter the stablecoin market by introducing a US dollar-pegged digital currency aimed at rivaling current market frontrunners.
The current market value of stablecoins hovers around $161 billion, while their daily trading volume reaches approximately $37 billion, based on data from CoinGecko.
CryptoMoon attempted to get more information from Visa and Tether, the prominent stablecoin provider, but has yet to receive a prompt reply.
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2024-05-06 07:49