Citigroup is betting big on stablecoins. Their latest report predicts massive growth for this type of cryptocurrency. But what’s driving this prediction, and what are the potential roadblocks?
A Bright Future for Stablecoins?
Citigroup forecasts a sevenfold increase in the stablecoin market within the next five years. They link this optimistic outlook to the US government’s push for a clearer regulatory framework for cryptocurrencies. A presidential task force, created in 2025, is working on this. This regulatory clarity, along with wider adoption by traditional financial institutions, is expected to fuel demand.
Looking at the numbers, the stablecoin market has already exploded. It’s grown 30 times larger in recent years, mirroring the overall crypto market’s massive growth. Citigroup projects a base-case scenario of a $1.6 trillion stablecoin market by 2030. A more bullish forecast reaches $3.7 trillion, while a conservative estimate still sees $0.5 trillion in growth.
This growth would have a significant impact on the US Treasury market. Citigroup anticipates a trillion-dollar increase in US Treasury purchases as stablecoin issuers need to hold these assets as collateral.
Challenges on the Horizon
While Citigroup is bullish, they acknowledge potential challenges. Stablecoins, which are pegged to a fiat currency (like the US dollar), could face competition from other countries. Europe and China might develop their own central bank digital currencies (CBDCs) or stablecoins tied to their own currencies. This could limit the dominance of US dollar-pegged stablecoins, potentially keeping them at around 90% of the market by 2030.
Another major risk is the possibility of a “de-pegging” event. If a stablecoin loses its peg to the dollar, it could trigger a liquidity crisis affecting the entire crypto market.
Currently, the stablecoin market is worth around $237 billion, with Tether holding the largest share. Despite the risks, Citigroup’s prediction highlights the potential for significant growth in this sector.