From the beginning of the year until now, the total supply of stablecoins, known as “stablecoin,” has decreased by about 12%, from $139 billion USD at the start of the year to $122 billion USD in August 2023. The news about PayPal launching its stablecoin called PYUSD has been warmly welcomed by the community, seeing this as a significant step forward as a major player in the payment industry enters the stablecoin market. However, we should also not overlook the fact that the supply of this type of asset has been decreasing for over a year.
Data from The Block shows that the total supply of various stablecoins has been decreasing since mid-2022. In 2023, the supply has decreased by around 12%, from $139 billion USD at the beginning of the year to $122 billion USD in August 2023. Some analysts believe that the downward trend might change, especially with PayPal entering this field.
Mark Lurie, CEO of Shipyard Software, analyzed, “If PayPal can demonstrate the value of using stablecoin, not only will the utility become evident and undeniable, but traditional financial institutions will also have to face competitive pressure to adopt stablecoin. If PayPal succeeds in truly utilizing stablecoin, it could catalyze the adoption of stablecoins.”
In the United States, regulations related to stablecoins are being reevaluated to expand their usage. The US Federal Reserve sent a letter to member banks of states, addressing “issuance, holding, or trading with US dollar-backed tokens to enable payments.” The Fed requires banks to demonstrate proper measures to address liquidity risk and unlawful finance.
In the future, both the United States and the United Kingdom seem to be adjusting their regulatory frameworks for stablecoins. The Federal Reserve’s new monitoring measures will focus on supervising banks involved in cryptocurrencies and decentralized ledger technology. Similarly, the UK is also considering joint supervision of the issuance and use of stablecoins.