Stablecoin Volumes Reach $450 Billion Monthly While Bitcoin Rises

Regardless of one’s opinion on Bitcoin, it is now generally acknowledged that it is not a passing fad. Wall Street trades it, politicians appeal to its supporters, intergovernmental agencies examine it and regulators have begun to vigorously scrutinize the cryptocurrency industry it birthed. But Bitcoin’s adoption and success as a political movement, now largely taken for granted, has come with ideological compromises that some early supporters may eschew.

Bitcoin’s offshoots have gained global popular appeal too. A report co-authored by Visa and Castle Island Ventures, published earlier this month, argues that stablecoins, which are crypto tokens pegged to the US dollar, are being used globally in countries like Turkey, Argentina, and Nigeria as an easy way for locals to receive payments or save in a stable currency. Stablecoin transaction volumes were estimated at $450 billion per month—roughly half of the just over $1 trillion that Visa processes monthly.

Bitcoin began as a form of protest against the 2008 global financial crisis. Today, bitcoin’s price currently hovers around $60,000, up 100 times from a decade ago and approximately six times its value from five years ago. The price of bitcoin was of interest only to a limited subculture 10 years ago, but it is now common knowledge in financial circles. The price of bitcoin is reported daily on mainstream financial news. Publications once considered conservative bulwarks of the financial system now print bitcoin’s price alongside the S&P 500 and gold. This shift makes sense: multiple bitcoin ETFs hold $60 billion in bitcoin, with daily volume exceeding a billion dollars on Wall Street.

Bitcoin today is not solely a Wall Street phenomenon. It has impacted global politics and macroeconomics. In 2023, the Washington-based International Monetary Fund, often considered the global financial establishment's 'Lender of Last Resort,' put out a paper on crypto arguing that:

… while the supposed potential benefits from crypto assets have yet to materialize, significant risks have emerged. These include macroeconomic risks, which encompass risks to the effectiveness of monetary policy, capital flow volatility, and fiscal risks.

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The IMF has acted on its own advice. In 2022, the IMF's bailout of Argentina included provisions that forced the government to adopt a strong anti-crypto stance.

Nor is it not only Washington-based central bankers who have taken notice. In 2022, Iran ran a pilot test to use cryptocurrencies using cryptocurrencies for trade to circumvent OFAC sanctions. In 2024, the US treasury sanctioned several companies and individuals for “conducting cryptocurrency transfers” for various Iran-linked entities. El Salvador, a UN-recognized sovereign state seeking to reinvent itself as a techno-utopia, adopted bitcoin as its national currency in 2021 and now holds a bitcoin reserve.

This widespread appeal of stablecoins and bitcoin alike extends beyond the developing world. A survey funded by Coinbase suggests that 20% of Americans—over 50 million people—own crypto, while other surveys estimate the figure closer to 10%. Either way, this is a substantial number with potential political impact. Just last week, former President Donald Trump visited a Bitcoin bar in New York, where he paid for drinks with bitcoin. Earlier in 2024, he attended the world’s largest Bitcoin conference as a keynote speaker.

This success has not come without conflicts and compromises. The ideology of the original cypherpunks is increasingly at odds with the day-to-day horse trading of politics. The bitcoin ETF has made it easier for everyday investors to invest in bitcoin, but this is at odds with the belief that people should 'be their own bank.' Those who own bitcoin through ETFs neither custody their own funds nor monitor their own transactions. Self-sovereignty and self-custody are complex, tedious, and unappealing to most retail investors. Bitcoin ETF holders want to benefit from bitcoin’s price increase without learning about hardware wallets or nodes. Perhaps ironically, they trust the American financial system enough to outsource these responsibilities.

Stablecoins, originally built on Bitcoin, have become one of crypto’s most impactful applications. However, they have replaced bitcoin as crypto’s primary means of exchange and unit of account. Moreover, they are backed by dollars within the same traditional financial system that bitcoin was designed to disrupt. Stablecoins are vulnerable to government censorship and can only be redeemed by verified individuals and institutions within the traditional financial system. For now, they provide people around the world with access to digital dollars with minimal regulatory friction. However, this access could be curtailed by a single piece of overzealous regulation.

Bitcoin began with dreams of private and anonymous cash. Major bitcoin players, from ETFs to exchanges, now employ 'blockchain surveillance' companies to monitor transactions on the network. By compiling proprietary data from exchanges and nodes, these companies can reasonably estimate the identities and actions of participants. Newer bitcoin enthusiasts, such as Michael Saylor and Donald Trump, support bitcoin’s 'hard money' principles but are less aligned with the anti-government libertarian stance on privacy and anonymity that its early advocates espoused. Several creators of crypto privacy tools have been arrested and prosecuted.

It is common for political movements to make compromises as they approach power. After all, bitcoin has been the most successful global political movement to emerge from the 2008 global financial crisis. Neither Occupy Wall Street nor the Tea Party are political forces anymore, but bitcoin remains. Will bitcoin advocates be able to accept these compromises moving forward? Is the rise in bitcoin’s price enough to compensate for what some perceive as an erosion of its original principles? Satoshi Nakamoto, Bitcoin’s anonymous creator, understood that cryptography was never meant to provide a permanent solution to political problems. However, bitcoin no longer enjoys the luxury of being dismissed as a passing fad by regulators and lawmakers. It is a movement now being taken seriously by authorities at the highest levels.