Benzinga - The market for stablecoins, digital currencies anchored to assets like the U.S. dollar, is projected to surge from its current value of $125 billion to a staggering $2.8 trillion within the next half-decade, according to a study.
A Bernstein report suggests that as these digital currencies integrate with mainstream consumer platforms, they will experience a momentum of growth, expanding their reach beyond platforms solely dedicated to cryptocurrency.
Analysts, including Gautam Chhugani, anticipate prominent global financial and consumer platforms will introduce their own co-branded stablecoins to facilitate transactions on their respective platforms.
A testament to this prediction, PayPal Holdings Inc (NASDAQ: PYPL) recently announced its foray into the cryptocurrency realm with the introduction of its own stablecoin, PayPal USD (CRYPTO: PYUSD).
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Notably, this Ethereum-backed token marks a pioneering move by a major financial institution.
Initially, PYUSD will be accessible via PayPal, followed by its availability on Venmo. Users can also convert it to dollars whenever they wish.
The report further highlights that stablecoins will leverage an ultra-fast financial settlement infrastructure, either through layer 2 solutions or centralized platforms, on public blockchain networks like Ethereum (CRYPTO: ETH).
The primary growth drivers in this sector will be regulated stablecoins that operate within legal frameworks.
The study also points out that stablecoin-related regulations are garnering more political backing compared to broader cryptocurrency regulations.
This is evident as countries such as Singapore, Hong Kong and Japan embark on experimental projects centered around stablecoins and Central Bank Digital Currencies (CBDCs).
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