Stablecoins moved more than $35 trillion on blockchain rails last year, but only about 1% of that was for real-world payments, according to a new report by the consultancy firm McKinsey and the blockchain data firm Artemis Analytics.
Their analysis estimated that only $380 billion of activity reflected actual payments, such as paying suppliers, sending remittances or funding payroll.
That represents only a tiny fraction, some 0.02% of the overall global payments volume, which McKinsey put at more than $2 quadrillion annually.
The finding comes at a time when competition to dominate stablecoin-based payments is intensifying. Traditional payment giants like Visa and Stripe are pushing into stablecoin rails, while crypto firms like Circle and Tether pitch their tokens as replacements for slow and costly international money transfers.
While stablecoins are a fast-growing area with much potential, the report said, the headlines claiming stablecoin transaction volumes are overtaking Visa’s or Mastercard’s multi-trillion payment flows miss a key point. The bulk of the stablecoin volume represents crypto trading, internal transfers or protocol-level functions that don’t touch end users, the authors said.
Long-term potential
So, where exactly are stablecions being used?
The report highlighted three areas where stablecoins are being used as a payment vehicle: business-to-business (B2B) transactions with $226 billion in annual volume; global payroll and remittances totaling $90 billion; and capital markets activity, such as automated fund settlements, totaling $8 billion last year.
“To be clear, the fact that true stablecoin payments are much lower than routine estimates doesn’t diminish stablecoins’ long-term potential as a payment rail,” McKinsey and Artemis analysts wrote.
“Instead, it establishes a clearer baseline for assessing where the market stands and what will be required for stablecoins to scale.”