Stablecoin Supply Continues To Drop
Although the industry applauded PayPal’s stablecoin launch this week amid enthusiasm about the entry of a big American payment company into the market, the asset class’s supply has been falling for more than a year.
The overall amount of stablecoins has been decreasing since the middle of 2022, according to data from The Block. From $139 billion at the beginning of the year to $122 billion in August of 2023, supply has decreased by almost 12%.
Given PayPal’s entry into the market, several analysts believe the downturn may be about to alter.
Meanwhile, regulatory frameworks appear to be preparing for a rise in stablecoin usage.
In a letter to state member banks, the U.S. Federal Reserve stated that banks must show appropriate procedures to deal with liquidity and illicit finance risks if they are interested in “issuing, holding, or transacting in dollar tokens to facilitate payments.”
(With inputs from Shikha Singh)
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