Stablecoin trading volume reached a record high of $7.4 trillion in 2022, according to a report by The Defiant. This marks an increase of more than 600% from two years ago when the market saw only $1 trillion worth of transactions.

Stablecoins Surpass Major Credit Card Providers in Volume

In comparison, major credit card providers, including Mastercard, American Express, and Discover, recorded $2.2 trillion, $1 trillion, and $200 billion in volume, respectively. Only Visa had a higher volume, with $12 trillion in transactions this year.

Stablecoins are digital currencies pegged to a stable reserve asset like the US dollar and make up about 18% of the overall global crypto market cap.

USDC Gained Market Share While USDT Remained Stagnant.

The data shows that Tether (USDT), the world’s largest stablecoin, has been stagnant since last year while its major rival, USD Coin (USDC) and others, have been gaining market share at the same time.

USDC more than doubled its trading volume to $2.9 trillion in 2021, while USDT saw its transactions drop to $3.5 trillion this year from $3.7 trillion in the prior year.

The total trading volume of the seven other stablecoins tracked by CoinMetrics also increased by 30% from $1 trillion in 2021, while the trading volume of other top crypto assets plummeted by more than 90% during the same period.

Stablecoin Adoption Expected to Increase in Long-Term

Despite the market turmoil, such as the de-pegging of TerraUSD (UST) this year, investors continue to show interest in the stablecoin sector.

Leading crypto exchange Coinbase expects stablecoin adoption to increase in the long term and predicts that stablecoins native to decentralised finance (DeFi) protocols may become a meaningful share of the sector.

(By William A. Frederick)