Wall Street Bank Citi (C) Sees Stablecoins Powering Crypto’s Next Growth Phase

Citi (C) said stablecoins have climbed in step with the wider crypto market since the GENIUS Act passed in July, prompting its analysts to lift their 2030 market cap outlook to $1.9 trillion last month.

Stablecoins remain primarily an on-ramp to crypto and have consistently accounted for 5%–10% of total market capitalization, the bank said in the report on Friday.

The bank’s analysts expect near-term growth to move in step with the broader digital asset market.

Stablecoins are cryptocurrencies whose value is tied to another asset, such as the U.S. dollar or gold. They play a major role in cryptocurrency markets, providing a payment infrastructure, and are also used to transfer money internationally. Tether’s USDT is the largest stablecoin, followed by Circle’s USDC.

Citi argued that the effect on bank deposits will likely be modest. While funding costs and lending appetites could shift, the report drew a parallel to the rise of money market funds in the 1980s, which did not significantly disrupt overall lending.

The stablecoin boom has revived activity on the Ethereum blockchain, but the analysts warned this dominance could fade as issuers develop their own networks.

Network effects could sustain the blockchain’s position for now, but it’s no longer guaranteed.

The bank sees the main driver of stablecoin adoption as their “store of value” role in emerging markets facing inflation or weak institutions. That could fuel further demand for dollar assets but may also trigger policy responses to limit dollarization. Payments, by contrast, remain a niche use case with mostly small transactions.

The dollar continues to dominate the market, though euro-denominated stablecoins are gaining from a small base. New rules in Hong Kong highlight how regulation outside the U.S. could reshape the landscape, the report said.

Read more: Stablecoins Surge to Record $314B Market Cap as Institutional Race Heats Up: Canaccord