Navigating stablecoin evolution: outlook and opportunities for 2024

Evgeny Filichkin, Investment Advisor at neobank Keytom, shares major stablecoin trends to watch out for in 2024.

Throughout 2023, the stablecoin market has gone through significant shifts, highlighted by the challenges encountered by BUSD and USDC. The collapse of major crypto banks such as Silvergate and Silicon Valley Bank (SVB) led to significant instability, causing Binance to shut down support for BUSD issued in partnership with Silvergate. Meanwhile, the USDC’s decrease in usage gained momentum after it lost its peg to the US dollar, primarily due to its exposure to the collapse of SVB.

That said, despite the challenges that it went through last year, the stablecoin market is far from throwing in the towel. If anything, it’s actively gaining ground, fueled by regulatory uncertainty around cryptocurrencies, as companies seek out safer alternatives.

The current stablecoin market cap stands at over USD 144 billion, with growth being observed across many stablecoins. So, while the market is still navigating its way through many changes, one thing is clear: stablecoins are here to stay, and the outlook for their utilisation in 2024 appears dynamic and promising.

So, let’s take a closer look at the trends and developments that we can expect to shape the stablecoins landscape in the coming months.

The crypto market is generally known for its volatility, and stablecoins are one of the instruments that help stabilise it. Given that the industry is still feeling the aftereffects of 2023’s economic turmoil, that stability is much needed, which goes some way to explain the growing attention to these assets.

There is a notable trend towards corporate and financial institutions adopting stablecoins, indicating a shift towards mainstream financial integration. Global businesses like Visa and PayPal are actively adopting stablecoins as a settlement method. This, coupled with the rise of Central Bank Digital Currencies (CBDCs), highlights the ongoing transformation in the digital currency space.

The more progressive jurisdictions across the world have been attempting to make digital asset regulation more understandable and transparent. A good example of this is Hong Kong, where the potential introduction of a digital Hong Kong dollar (e-HKD) is being explored. This illustrates the region’s commitment to becoming a global hub for Web3 development. The HKMA’s regulatory framework is expected to accelerate innovation and Hong Kong’s participation in the digital economy, potentially setting a precedent for other jurisdictions.

The regulatory clarity in stablecoin projects could considerably enhance their utility in business transactions and cross-border payments. By providing a stable medium of exchange, stablecoins could facilitate more efficient and cost-effective financial operations, especially in the context of international trade. This point is further underscored by the fact that the Bank for International Settlements (BIS) is exploring the potential of stablecoins within the G20's plan to improve cross-border payments.

Ecommerce

The integration of stablecoins in ecommerce presents a significant advancement in the realm of online retail, offering businesses a seamless means to accept payments from customers worldwide. By using stablecoins, online retailers can ensure price consistency for their products, thus eliminating concerns about fluctuating rates that arise with more typical cryptocurrencies.

Moreover, stablecoins offer online retailers the opportunity to reduce transaction fees compared to traditional payment methods like credit cards. This translates to cost savings for businesses, ultimately improving their bottom line. Additionally, the immutable nature of blockchain transactions can reduce the likelihood of fraudulent chargeback claims, a common challenge faced by merchants in ecommerce. This adds an extra layer of security, providing greater peace of mind to online sellers.

Decentralized Finance

Stablecoins have emerged as a crucial component of the decentralized finance (DeFi) ecosystem, offering users a reliable medium of exchange and store of value. By leveraging stablecoins, users can engage in lending, borrowing, and other financial activities with confidence, knowing that the value of their assets remains stable, regardless of market fluctuations.

Furthermore, stablecoins offer significant utility in yield farming and staking within the DeFi space. Due to the inherent price stability, they are an attractive option for investors seeking to earn passive income on their holdings. Additionally, users can lock up their assets in smart contracts to support network operations and secure the blockchain while earning staking rewards in return at potentially higher interest rates compared to traditional savings accounts.

Real Estate

Integration of stablecoins into real estate transactions can significantly reduce reliance on traditional banking and financial services, leading to faster and more cost-effective payment processes. By using stablecoins, buyers and sellers can bypass lengthy processes, such as wire transfers and currency conversions, which often entail high fees and prolonged settlement times.

This streamlined approach not only accelerates the transaction process but also minimises the associated costs, making real estate transactions more accessible to a broader range of investors and buyers.

As 2024 unfolds, stablecoins emerge as a beacon of stability in the midst of regulatory uncertainties and market volatility. With increased regulatory scrutiny surrounding cryptocurrencies, many investors and businesses are turning to stablecoins as a reliable alternative.

Furthermore, the versatility of stablecoins opens doors to a myriad of use cases across various industries, from ecommerce and supply chain management to decentralized finance and real estate. As this market continues to evolve and innovate, 2024 holds a lot of potential for exploring the diverse applications of stablecoins and unlocking new opportunities for growth and development.

About Evgeny Filichkin

Evgeny Filichkin is an Investment Advisor at Keytom, responsible for evaluating and recommending suitable investment strategies, initiatives, and approaches for optimal capital efficiency. With over 20 years in financial markets, Mr. Filichkin has extensive experience in working with banks, brokerages, family offices, and hedge funds.

Over the course of the past two decades, he has held C-Level positions in multiple high-profile financial and fintech companies, contributing to their development into international entities. As a way of furthering his business acumen, Evgeny previously completed an MBA course at the Rotterdam School of Management, which ranks among the best business schools in Europe and globally.

About Keytom

Keytom is a modern neobank that brings together the best aspects of both traditional banking and innovative fintech technologies. Combining classic finance and cryptocurrencies, the company sets for itself the mission to create a multi-purpose platform that accelerates the world's transition to digital financial services.

Keytom offers a vast array of easy-to-access solutions, enabling individuals and businesses alike to operate seamlessly within both fiat and crypto domains. The team believes in bridging these two worlds into a single coherent ecosystem where everyone can manage their assets more effectively.