A new report by Visa Crypto and Castle Island Ventures shows that stablecoin purchasing is shifting from speculative buying to everyday usage – particularly in developing economies.
The report shows that the global supply of stablecoins in the aggregate is around $170 billion and that they settle trillions of dollars worth of value every year. Around 20 million addresses on-chain make a stablecoin transaction every month. Over 120 million addresses on-chain hold a non-zero stablecoin balance. These numbers indicate that stablecoins are a serious parallel financial infrastructure – having started at near zero just five years ago.
But the research space around stablecoins has thus far failed to answer the question of whether usage is limited to crypto use cases, or has begun to spill over into the ordinary financial lives of users, the group said.
The study reveals that stablecoin usage is steadily increasing, as seen in the rise of monthly active addresses, total supply, and transaction value. Notably, new estimates show stablecoins are becoming a significant alternative to traditional payment networks, without the inflated figures that previously skewed on-chain data.
Contrary to the common belief that stablecoins are mainly used for speculative trading, survey results indicate a broader range of uses. Among crypto users, 47% use stablecoins for saving in dollars, 43% for currency conversion, and 39% for generating returns. While accessing crypto exchanges remains the primary use case, many are also using stablecoins for general economic activities outside of crypto.
For non-crypto purposes, the most common use of stablecoins is currency substitution (69%), followed by paying for goods and services (39%) and cross-border payments (39%). It’s clear that in the surveyed countries, stablecoins have developed from trading tools into widely used digital dollar alternatives.
Africa ripe for disruption
In Sub-Saharan Africa, 75% of countries are actively engaged in research and pilot projects focused on innovative digital payment systems. Of these, 25% of respondents plan to launch some form of digital cash system by 2028. The primary motivations for adopting digital cash systems include enhancing financial inclusion and improving payment efficiency.
Respondents also make a clear distinction between cryptocurrencies and Central Bank Digital Currencies (CBDCs) or digital cash systems. Notably, 77.3% do not view digital cash as interest-bearing, aligning it more closely with traditional cash.
A strong relationship exists between digital cash systems and mobile money, with 96.4% of respondents considering digital cash complementary to mobile money. Additionally, 96.6% of countries already have circulating forms of digital money, such as mobile money, in their economies. Interestingly, all of the existing digital money in these countries is issued by the private sector. In Uganda, privately issued money makes up 95.7% of the market-size GDP, highlighting the significant role of private entities in the digital money space.
To sustain this upward trajectory, there’s a need for efficient financial systems capable of supporting a fast-expanding population and economy. The tokenisation of conventional money offers a new model for streamlining transactions and expanding financial inclusion in the face of this rapid growth.
This was highlighted in a recent Financial Times article by Sarah Breeden (Deputy Governor of the Bank of England for financial stability). She noted that although there has been dramatic change within the payments space within her lifetime, things cannot be made better.
She points to several developing countries where consumers can pay retailers directly from their bank accounts without using cards using a mobile phone number or QR code – making it possible for even the smallest businesses to accept payments at a lower cost.
‘More fundamentally, we should consider applying new tokenisation technology to conventional money, rather than in the crypto asset markets where they were first employed,’ she says.
‘This technology allows the digital representations of assets on programmable platforms such as blockchains. It could allow payments to be embedded more efficiently and deeply into our increasingly digital economy.’
KitePesa: A Pilot Tokenising the Uganda Shilling
A pioneering example of tokenisation in Uganda is KitePesa. Built on the BSV blockchain, KitePesa is a payment innovation of Kampala/Uganda-based Kite Financial, a team focused on building neo-banking services catering to the needs of small and medium-sized businesses in the growing digital economy.
Leveraging BSV’s capabilities, KitePesa allows for micropayments, enabling transactions as small as a thousandth of a dollar, and is built on resilient, scalable infrastructure capable of handling up to one million transactions per second.
The system will support programmable money, allowing for smart contracts and tokenisation of assets like real estate and precious metals. In this way, KitePesa is well ahead of other conventional forms of mobile money and provides users and service providers with many additional usage and application options.
