Competition for Stablecoin Supremacy Nears Phase Three, According to Fireblocks Analysis
The battle for dominance in the stablecoin market is poised to escalate into its next critical phase, as highlighted in a recent report by Fireblocks. Industry observers anticipate intensified rivalry among key players vying for market share, with innovations in regulatory compliance, cross-chain interoperability, and yield-bearing features expected to drive the next wave of adoption. This development comes amid growing institutional interest and evolving global financial regulations that continue to shape the digital asset landscape.
Growth in international payments
Stablecoins grew to prominence as an essential way of moving money between volatile cryptocurrencies, meeting a particular need given the industry’s shortage of fiat on and off ramps. Dollar-pegged coins of various sorts blossomed further with the explosion of decentralized finance (DeFi).
Looking further back, the early days of crypto show an evolution of payment service providers (PSPs), starting with those who wanted to use cryptocurrencies to settle their bills. This was followed by a second wave of business-to-business PSPs like Bridge, recently acquired by Stripe, and Zero Hash, Alfred Pay, Conduit and others.
“Some of these PSPs are firms you may not have heard much about, but they are actually moving billions in stablecoins, servicing businesses to pay to other businesses most of the time,” Goldi said. He pointed out that less than 20% of Fireblocks’ total transaction volume was stablecoins in 2020, increasing to some 54% last year.
For a typical use case, consider an importer in Brazil that wants to bring in a container and pay someone in Turkey or in Singapore. It takes the Brazilian reals, converts them to a stablecoin, and either sends the funds directly to the exporter or changes them to the destination currency and pays with that, Goldi said.
Some banks have already caught on to the cross-border payments use case, with the likes of Braza Bank in Brazil, BTG Bank and DBS in Singapore catering to business clients with accounts that support stablecoins. Others are still weighing the best use case for them.
“We have been approached by dozens of banks,” Goldi said. “They are asking whether they should be on/off ramps, or holding reserves, or perhaps they are thinking about issuing a stablecoin. There are several things banks can do to make money out of stablecoins, from credit to on/off ramps to FX.”
Based on those conversations, Goldi said he believes most of the banks are writing strategic plans that will probably be submitted by the end of this quarter.
“It will be interesting to see if banks build something on their own, or use BNY Mellon, for instance, that serves banks, or a vendor like Fireblocks. I think the large tier-1 banks like JPMorgan, Citi and Morgan Stanley will build their own tech, while the tier-2 banks will want to use some hosted tech provider,” Goldi said. “Of course they are banks and they move slowly, so I think they would be looking to approve those plans by the end of this year and perhaps do something in 2026.
