Citi Report: Stablecoins Challenge Bitcoin’s Potential to End USD Supremacy

Citi Report Reveals Stablecoins’ Growing Influence on U.S. Dollar’s Supremacy

Citi Report – Citi analysts have argued that stablecoins are not only reinforcing the dominance of the U.S. dollar but also challenging the belief that Bitcoin (BTC) could eventually dethrone the U.S. dollar. According to Citi’s new report, stablecoins are playing a crucial role in reinforcing the dollar’s supremacy, despite initial assumptions that cryptocurrencies like Bitcoin were designed to rival central bank–issued currencies.

Stablecoins and the U.S. Dollar: A Strong Connection

The analysts pointed out that stablecoins, which account for over 80% of cryptocurrency trading volume, are predominantly pegged to the U.S. dollar. Issuers of stablecoins maintain U.S. dollars and U.S. Treasury bills (T-bills) in reserve to back these digital assets. Citi suggests that if the U.S. government moves to further legitimize stablecoins, it could further boost the U.S. dollar’s global dominance by making it more accessible to the world.

Potential Regulatory Clarity and Future Impact

Citi also highlighted that greater regulatory clarity could enhance the appeal of stablecoins. The analysts noted that demand for U.S. Treasury bills from stablecoin issuers might increase significantly in the future. Currently, these issuers account for around 1% of U.S. Treasury bill purchases, but this could grow with further regulation.

Stablecoin Usage Soars, Outpacing Traditional Payment Providers

Stablecoin usage has surged in recent years, with a record $5.5 trillion in value transacted in the first quarter of 2024. For comparison, traditional payment provider Visa reported about $3.9 trillion in volume during the same period. In response to this growing trend, companies like Visa and PayPal have started adapting by offering their own stablecoins or settling transactions using other firms’ digital currencies.

Citi’s report suggests that rather than undermining the U.S. dollar, stablecoins could further solidify its position as the world’s dominant currency.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Cryptocurrencies and stocks, particularly in micro-cap companies, are subject to significant volatility and risk. Please conduct thorough research before making any investment decisions.