Citigroup envisions a key role for stablecoins, with the potential for a total supply of $1.6T by 2030. A new paper by Citi Institute tracks the positive development scenario for the blockchain space by the end of the decade. Citi Institute predicts the total supply of stablecoins will increase as high as $1.6T by 2030 in the base case scenario. In a more bullish development, the market may see up to $3.7T in stablecoins. Issuers may become some of the biggest holders of US Treasuries, a convenient and liquid collateral. Stablecoin issuers may become the biggest buyers for US Treasuries, due to the dollarization of the crypto market. | Source: Citigroup The research also suggests blockchain technologies and stablecoins may have a ‘ChatGPT’ moment by the end of 2025, as improved regulations may lead to wider adoption in the financial sector. Stablecoins have already seen regional regulation, while the USA passed a new stablecoin bill to differentiate between different types of asset-backed tokens. Citigroup believes the crypto market will remain dollarized, with up to 90% of issued stablecoins based on the US dollar. Other countries may start experimenting with centralized CBDCs, denominated in other currencies. The dollarization will lead to demand for US Treasuries, which are already backing USDT and other stablecoins. Even in 2024, Tether ranked among the top 7 holders of US Treasuries, competing with other large corporate and state entities. Citi Institute predicts demand for $1T in US Treasuries by 2030 in the base case scenario. The report bases the figure on estimated demand in the case of favorable regulation and transparent US-based stablecoin issuers. Stablecoins still pose a contagion risk Citi Research counted 1,900 events when stablecoins deviated from their $1 value in 2025. Even asset-backed tokens can fluctuate, while algorithmic coins can have even more dramatic de-pegging events. Even regulated coins like USDC felt the pressure from a sudden demand for redemptions. In 2023, the failure of Silicon Valley Bank led to a temporary USDC crisis. Despite this, Citi Research believes stablecoins may serve as a source of global liquidity and serve as a dollar-based standard for developing markets. Stablecoins can serve as a substitute for holding US dollars in cash and replace some of the functions of fintech apps. If locally allowed, some stablecoins can also carry yield, serving in place of bank-based products. Stablecoins can also replace payment accounts and other US dollar reserves, due to 24/7 uptime and convenience. Citigroup still believes stablecoins pose some threat to the banking sector, with an increased technical risk due to hacks and scams . In addition to private payments, Citigroup predicts blockchain usage for public spending and expense tracking. So far, governments have only tested blockchains and have implemented a few on-chain solutions for transparent reporting. Citi believes smart contracts can replace some procedures for public tenders and play a role in automated tax collection. On-chain tokens can also be used to issue and sell digital bonds and other assets with fractional ownership. On-chain automation can also be used to disburse and track public grants, the report suggests. Cryptopolitan Academy: Want to grow your money in 2025? Learn how to do it with DeFi in our upcoming webclass. Save Your Spot
