Citigroup has significantly revised its stablecoin market forecast upwards, projecting the sector to reach a staggering $1.9 trillion by 2030 in its base case scenario. This optimistic outlook, a substantial increase from previous estimates, underscores a growing belief in stablecoins' future role, driven by evolving regulatory clarity and deeper integration into payment networks. However, the report simultaneously highlights a notable paradox: current institutional adoption remains remarkably low, signaling significant hurdles that the ecosystem must overcome.
Bolstered Projections and Core Drivers
Citi's latest report elevates its stablecoin market projection from $1.6 trillion to $1.9 trillion by 2030, with a bullish scenario reaching $4 trillion. This accelerated momentum is primarily attributed to three key drivers. Firstly, partial deposit substitution, particularly in the US and overseas, is expected to account for 45% of this growth, with 2.5% of 2030 US bank deposits potentially shifting to stablecoins. Secondly, the continued expansion of the broader crypto market contributes 40% of the growth, fueled by an anticipated 20% annual increase in stablecoin issuance. Lastly, 15% is expected to come from banknote substitution, specifically targeting 10% of overseas US currency holdings and 2.5% of domestic banknotes. This comes as the current stablecoin supply has already surged to $292 billion, with monthly transaction volumes nearing $1 trillion.
The Institutional Adoption Gap and Emerging Alternatives
Despite these robust projections, the report reveals a stark reality regarding institutional engagement. Visa's head of institutional client solutions, Catherine Gu, characterizes current institutional stablecoin adoption at a mere 0.5 on a scale of 0 to 10. Large corporations, already benefiting from favorable banking terms and efficient payment systems, exhibit curiosity rather than enthusiasm, diminishing stablecoins' appeal for high-value transactions. Moreover, Citi suggests that bank-issued tokens, such as tokenized deposits, could potentially surpass stablecoins in transaction volume by 2030, possibly exceeding $100 trillion annually. These alternatives offer familiar regulatory frameworks and seamless integration with existing treasury systems, addressing some of the critical challenges faced by stablecoins, including fragmentation across blockchains, privacy concerns on public networks, and a lack of cash equivalent recognition under accounting standards like IAS7.
Paving the Way for Enterprise-Scale Deployment
The report concludes that despite considerable regulatory progress, including legislative initiatives like the GENIUS Act and the establishment of international frameworks in regions such as Hong Kong and the UAE, enterprise-level adoption of stablecoins is still hindered. For stablecoins to achieve their full potential and truly capture institutional interest, fundamental issues around interoperability, scalability, and fostering greater trust within the ecosystem must be comprehensively addressed.
