Visa Study Reveals that Majority of Stablecoin Transactions Are Not Genuine Users
According to a recent study conducted by Visa and Allium Labs, more than 90% of stablecoin volumes come from sources other than genuine users. This challenges the belief that stablecoins, which are cryptocurrencies tied to a specific asset, such as the US dollar, are set to revolutionize the $150 trillion payments industry. The findings were reported by Bloomberg on Monday.
To address this issue, Visa and Allium Labs have developed a joint dashboard that aims to filter out transactions initiated by bots and large-scale traders in order to isolate those made by real individuals.
The data from April shows that out of approximately $2.2 trillion in total transactions, only $149 billion can be attributed to “organic payments activity” conducted by genuine users. This suggests that stablecoins are still in the early stages of their development as a payment instrument.
Pranav Sood, the executive general manager for EMEA at payments platform Airwallex, believes that stablecoins do have long-term potential despite these findings.
Accurately tracking the value of crypto activity using blockchain data has always been a challenge. For example, data provider Glassnode estimated that the record $3 trillion market circulation assigned to digital tokens during the peak of the 2021 bull market was actually closer to $875 billion.
Stablecoin transactions often face the issue of double-counting, depending on the platform to which users transfer funds. Cuy Sheffield, Visa’s head of crypto, explained that converting $100 of Circle Internet Financial’s USDC to PayPal’s PYUSD on the decentralized exchange Uniswap would result in $200 of total stablecoin volume being recorded on-chain.
Visa, a company that processed over $12 trillion worth of transactions in 2020, could potentially be negatively impacted if stablecoins gain widespread acceptance as a means of payment.
Analysts at Bernstein predict that the total value of all stablecoins in circulation could reach $2.8 trillion by 2028, representing an almost 18-fold increase from their current combined circulation.
Advocates of stablecoins argue that their near-instantaneous transactions and low costs make them ideal for disrupting the payments sector. PayPal introduced its PYUSD stablecoin last year to facilitate instant and lower-cost transfers within its payment infrastructure. Similarly, Stripe recently announced that it would allow merchants using its platform to accept stablecoins for online transactions.
However, Airwallex has observed limited demand for stablecoin-based payment solutions from its customers, as many still do not find the technology user-friendly enough.
“It’s a really significant barrier to overcome,” said Sood.
