Citigroup Sees Stablecoins Powering Financial Evolution

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According to a recent report by investment banking giant Citigroup, the blockchain sector could soon experience a pivotal adoption surge, likened to the breakthrough generative AI had with ChatGPT.

Analysts argue that increasing institutional momentum and clearer regulations may significantly accelerate mainstream integration of blockchain technologies, especially stablecoins.

2025: A Breakout Year

Citi’s analysts cite regulatory clarity—particularly in the U.S.—as a potential game-changer. In an April 23 report, they emphasized that legislation like the proposed GENIUS Act, aimed at standardizing stablecoin use for payments, could eliminate key legal ambiguities and pave the way for broader financial adoption.

“2025 has the potential to be blockchain’s ‘ChatGPT’ moment for adoption in the financial and public sector,” the report states.

Also read: ARK Invest Boosts Bitcoin Price Forecast to $2.4M on Supply and Demand Shift

Projections suggest that, with favorable regulation, the stablecoin market could reach a staggering $3.7 trillion by 2030. Even under more conservative assumptions, Citi expects at least $1.6 trillion in market cap.

Stablecoins: The Backbone of the Future Financial System

Currently, the stablecoin market is valued at over $230 billion—a 54% year-over-year increase—driven largely by leaders Tether (USDT) and USD Coin (USDC), which together command 90% of the sector.

While global players like China and the European Union are promoting central bank digital currencies (CBDCs) or stablecoins in their native currencies, Citi expects the U.S. dollar to remain the dominant denomination.

The report notes that stablecoins are increasingly viewed as instruments of dollar hegemony, though geopolitical shifts may prompt diversification.

Also read: Stablecoin Boom: 53% Surge in Active Wallets Signals Massive Adoption

A Catalyst for U.S. Treasury Demand

The Citigroup report also outlines a potentially transformative effect stablecoin issuers could have on the demand for U.S. Treasuries. To meet regulatory requirements and maintain user trust, issuers are expected to back each coin with low-risk assets—chiefly Treasuries.

Stablecoin issuers could have significant holdings of US Treasuries by 2030 (Source: Citigroup)

By 2030, Citi projects that stablecoin issuers could collectively hold more Treasuries than any single national government does today.

Citigroup Says Challenges Still Loom

Despite the optimistic outlook, the Citigroup report acknowledges considerable risks. Should adoption hurdles persist, the stablecoin market may stagnate around $500 billion. Depegging remains a critical concern as well, with 1,900 incidents reported in 2023 alone, including the notable USDC depeg following Silicon Valley Bank’s collapse.

Also read: The Stablecoin Shake-Up: Fidelity Enters the Arena

Citi warns that a significant depegging event could trigger mass redemptions, impair liquidity, and even threaten broader financial stability.

Author

Steven Walgenbach

Steven's passion for cryptocurrency and blockchain technology began in 2014, inspiring him to immerse himself in the field. He notably secured a top 5 world ranking in robotics. While he initially pursued a computer science degree at the University of Texas at Arlington, he chose to pause his studies after two semesters to take a more hands-on approach in advancing cryptocurrency technology. During this period, he actively worked on multiple patents related to cryptocurrency and blockchain. Additionally, Steven has explored various areas of the financial sector, including banking and financial markets, developing prototypes such as fully autonomous trading bots and intuitive interfaces that streamline blockchain integration, among other innovations.

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