The stablecoin market is expected to grow to $2.8 trillion in the next five years from $125 billion now, broker Bernstein said in a research report Wednesday.
Integration with consumer platforms will lead to a “growth flywheel” for stablecoins — a type of cryptocurrency that's typically pegged to the U.S. dollar — allowing issuers to capture users and expand distribution beyond crypto native platforms, the report said.
“We expect major global financial and consumer platforms to issue co-branded stablecoins to power value-exchange on their platforms,” analysts led by Gautam Chhugani wrote.
Just this week, payments giant PayPal (PYPL) said it is entering the crypto market with its own dollar-pegged stablecoin, PayPal USD (PYUSD). This is a first for a major financial company. The Ethereum-based token will be available first on PayPal and then on Venmo, and can be exchanged for dollars at any time.
Stablecoins will be powered by a “hyper-fast financial settlement layer (layer 2 or centralized consumer platforms)” on public blockchains such as Ethereum, the note said.
Growth will be led by “regulated, onshore stablecoins," the analysts wrote.
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