Stablecoin Demand May Slow As Transaction Speed Rises, Says Standard Chartered

Faster movement of stablecoins across networks could reduce the need for new token supply, even as transaction volumes continue to grow, according to a new report from Standard Chartered.

The bank noted that stablecoin velocity — a measure of how frequently tokens are used relative to their total supply — has doubled over the past two years. This increase is being driven by expanding use cases in payments, artificial intelligence, and traditional finance (TradFi).

Earlier coverage: 72% Of Finance Leaders Say Digital Assets Are Now Essential, Ripple Survey Finds

While higher transaction activity would normally require more stablecoins, analysts say increased velocity allows the same supply to support a larger volume of transactions.

“If velocity remains constant, rising transactions will create demand for more stablecoins, but if it increases, that will not be the case,” said Geoff Kendrick, head of crypto research at Standard Chartered.

Despite this shift, the bank maintains its long-term outlook that the stablecoin market could reach $2 trillion by 2028.

SHIFT IN USAGE PATTERNS RESHAPES STABLECOIN OUTLOOK

The findings represent a change from earlier expectations that stablecoin velocity would remain stable as the market expanded.

Instead, the recent increase suggests that stablecoins are being used in new, faster-moving applications. These include payment systems replacing traditional banking rails and emerging AI-driven transactions.

Kendrick noted that this rise in velocity does not appear to come from older use cases, such as using stablecoins for savings in emerging markets. Rather, it reflects a broader evolution in how digital dollars are being used globally.

This shift is significant because it challenges the assumption that market growth will always require a proportional increase in supply.

USDC DRIVES HIGHER VELOCITY, WHILE USDT REMAINS DOMINANT IN SAVINGS USE

The report highlights that the surge in stablecoin velocity — now averaging at least six times monthly turnover — is largely driven by USDC.

Velocity for USDC began rising sharply in mid-2024 across multiple blockchains, particularly on networks like Solana and Base. This trend points to growing adoption in TradFi-related applications and early-stage AI payment systems.

Monthly adjusted transaction volumes divided by average supply outstanding. Source: Standard Chartered

In contrast, USDT has maintained relatively lower velocity. Analysts attribute this to its strong presence in emerging markets, where it is often used as a store of value rather than for frequent transactions.

“In other words, the two market leaders appear to have different strengths by use case — emerging market savings for USDT and TradFi replacement for USDC,” Kendrick said.