Only 10% Of Stablecoin Transaction Volumes In April Originated From 'Organic Payments Activity'

Zinger Key Points
  • A metric developed by Visa and Allium Labs reveals that over 90% of stablecoin transaction volume in April lacked authenticity.
  • Despite this, notable industry players like PayPal and Stripe are continuing to invest in the stablecoin sector.

A study conducted by Visa V and Allium Labs unveiled that more than 90% of stablecoin transactions are not genuine, raising questions on the digital tokens' belief.

What Happened: According to the dashboard created by Visa and Allium Labs, stablecoins are far from achieving universal acceptance as a payment method. The study’s metric, which filters out transactions initiated by bots and large-scale traders, showed that of the $2.2 trillion total transactions in April, only $149 billion were "organic payments activity", as reported by The Business Times.

These findings are contradictory to the claims of stablecoin advocates, including fintech heavyweights like PayPal PYPL and Stripe, who are making substantial progress in the stablecoin arena.

Pranav Sood, executive general manager for the EMEA region at payments platform Airwallex, stated that stablecoins are at a very early stage as a payment instrument. "That's not to say that they don't have long-term potential, because I think they do. But the short-term and the mid-term focus needs to be on making sure that existing rails work much better," Sood said.

Also Read: Tether Looks Beyond Stablecoins, Restructures Operations Into Four Divisions

Why It Matters: Data provider Glassnode estimated that the record $3 trillion of total market circulation attributed to digital tokens at the peak of the 2021 bull market was actually around $875 billion.

Visa, which processed over $12 trillion worth of transactions last year, could potentially lose out if stablecoins become a universally accepted payment method. However, analysts at Bernstein predict that the total value of all stablecoins in circulation could reach $2.8 trillion by 2028.

This comes at a time when the U.S. is making strides towards stablecoin regulation. Although efforts to pass the U.S. stablecoin legislation were stalled, progress is expected soon. This development could have significant implications for the future of stablecoins and their potential as a mainstream payment method.

What’s Next: The influence of Bitcoin as an institutional asset class is expected to be thoroughly explored at Benzinga’s upcoming Future of Digital Assets event on Nov. 19.

Read Next: US Stablecoin Regulation Talks Stall, But Progress Is Near

This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Image: Shutterstock

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