Stablecoin velocity has doubled over the past two years. That’s according to new research from Standard Chartered. The shift could reduce the need for new token issuance. Transaction volumes keep growing anyway.
The bank reports stablecoins now turn over at least six times per month on average. USDC’s driving most of this. It’s expanding in traditional finance and AI-related payments.
The velocity increase marks a significant change. It’s changing how stablecoins circulate through the economy.
“If velocity rises, the same pool of tokens can support more activity, reducing the need for additional issuance even as overall transaction volumes increase,” Geoff Kendrick said. He’s a Standard Chartered analyst.
USDC is leading the velocity surge. Circle issues the stablecoin. It’s particularly active on Solana and Base networks, according to Standard Chartered.
This reflects USDC’s growing adoption. Traditional finance-style payments. Emerging AI payment networks. Both are driving usage.
Tether’s USDT tells a different story. It maintains relatively low velocity. That’s consistent with its dominant role in emerging market savings. Store-of-value functions keep it stable.
The divergence between the two largest stablecoins suggests something important. The market’s becoming increasingly segmented. Different tokens serve specialized roles. Savings. Payments. AI-driven finance. Each has its stablecoin.
USDC accelerates through payment channels. USDT continues to anchor low-turnover use cases in emerging economies.
The velocity increase could dampen demand for new tokens. Standard Chartered still forecasts the stablecoin market reaching $2 trillion by late 2028.
The research revises the bank’s earlier assumption. They thought velocity would remain broadly stable as the sector scaled. Wrong.
Kendrick noted velocity has remained largely unchanged in older use cases. Think emerging market savings. The shift is concentrated in newer payment applications.
The findings have implications. Market participants need to rethink how they forecast stablecoin growth.
Transaction volume projections aren’t enough anymore. Issuers and regulators need to account for how quickly tokens circulate. Faster turnover means fewer tokens are required to support large payment flows.
That potentially affects issuance strategies. Regulatory planning. Business models for stablecoin providers. Everything.
Stablecoins are expanding beyond crypto-native environments. They’re moving into traditional finance infrastructure. AI-driven payments. The sector’s evolution is reshaping fundamental assumptions about supply and demand dynamics in the digital currency economy.
