Jamie Coutts, an analyst from Bloomberg Intelligence, has predicted that stablecoin adoption will grow significantly once the issue of hostile regulations in the U.S. is put aside, noting “adoption under the hood is exploding.” Coutts believes that stablecoin usage may overtake bitcoin usage as more companies like Paypal integrate such assets in their payment structures.
Analyst Says Stablecoin Adoption Set to Grow
While the stablecoin market has been hammered recently due to the lack of clear regulations in the U.S., the adoption of these tools is set to boom enormously in the future. At least, this is the opinion of Jaime Coutts, a Bloomberg Intelligence analyst, who believes that even in the face of “U.S. boomer” regulations, these payment methods are likely to be adopted by companies like Paypal and credit giants like Visa and Mastercard.
In his analysis, Coutts acknowledges that the growth of the stablecoin market was significant during 2022, with total payments of stablecoins in various L1 blockchains reaching almost $6.9 trillion, surpassing the numbers of companies such as Paypal and Mastercard. However, year to date, this number has plummeted by 80%.
Coutts believes that stablecoins are ready to “explode” as more and more institutions try to jump onto the stablecoin bandwagon to follow companies like Paypal, which leapfrogged its competitors with the recent issuance of PYUSD, its in-house stablecoin. Coutts remarked that Visa and Mastercard have invested in integrating their services in open networks.
Payments companies that ignore the stablecoin-adoption trend are missing the speed at which scaling improvement is occurring.
Mainstream Use Limited by Transaction Count
However, Coutts says the growth of the stablecoin market will be limited by the capacity of blockchain to support this growth, as open networks will fail to provide the scalability that rails like Visa or Mastercard offer, processing 97% more transactions even with the added hassle of censorship and higher friction for their users.
Coutts pointed out that Ethereum and its set of L2 expansion layers — Arbitrum, Optimism, and Base — are set to be the carriers of this growth, as future updates will make L2 transactions cheaper with the adoption of proto-danksharding, also known as EIP-4844.
Finally, Coutts explained that stablecoin adoption could surpass Bitcoin adoption depending on market factors. He declared:
It’s possible stablecoin users will even overtake bitcoin in the next 3-5 years as network effects of payment and merchant-company integration (e.g. Paypal, Visa, Shopify) …and advances in scaling lay the infrastructure needed for mainstream adoption.
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