Standard Chartered: Stablecoin velocity spikes as use cases expand

• Standard Chartered reports that stablecoin velocity has doubled over the past two years, with tokens now changing hands an average of six times per month.
• The bank maintains its long-term forecast that the total stablecoin supply will reach $2 trillion by the year 2028.
• Increased activity is being driven by new use cases such as AI-driven payments and traditional financial rail replacements, particularly involving Circle’s USDC.

Changing Dynamics of Token Turnover

Standard Chartered has observed a significant shift in the behavior of stablecoins, noting that these assets are moving through the financial system much faster than previously anticipated. Geoffrey Kendrick, the bank’s global head of digital assets research, highlighted that stablecoin velocity—the frequency at which tokens are transacted—has surged after a long period of stability. This development is critical because the bank's future supply projections are based on how often these tokens are utilized.

Data from the bank indicates that the turnover rate has effectively doubled in the last 24 months. While rising transaction volumes usually signal a need for more tokens, a faster turnover rate means that existing supply can handle more volume, potentially slowing the need for new issuance. Kendrick noted that this trend is "contrary to our assumption" and requires vigilant monitoring to see if it becomes a permanent market fixture.

Drivers of Increased Velocity

The report identifies Circle’s (USDC) as the primary catalyst for this increased movement, with the token showing accelerated activity across a variety of blockchain networks. Analysts suggest this is not a universal shift for all stablecoins but rather a reflection of new, additive demand. While Tether (USDT) continues to dominate "low-velocity" use cases like savings in emerging markets, USDC is increasingly being used for more active financial purposes.

Key emerging use cases driving this speed include:

• Serving as a substitute for traditional financial payment rails.
• Facilitating early-stage AI-driven machine payments.
• Enhancing liquidity flows across multiple decentralized platforms.

Future Market Outlook and Impact

Despite the "unstable velocity" currently observed, Standard Chartered is standing by its bullish outlook for the sector. The bank reiterates its prediction that the stablecoin market cap will hit $2 trillion by 2028, which is expected to drive approximately $1 trillion in new demand for U.S. Treasury bills used as reserves.

Kendrick emphasized that stablecoins are evolving into a central force for global liquidity. The bank previously suggested that these assets could eventually attract up to $1 trillion from traditional bank deposits in emerging markets. As stablecoins integrate deeper into capital markets and automated transactions, the bank concludes that the speed of circulation will be just as important a metric as the total supply in defining the next phase of growth.