Visa Study Reveals Majority of Stablecoin Transactions (90%) Are Not Genuine: Impact on Crypto Coins Like Tether (USDT)

• A recent study by Visa and Allium Labs reveals that over 90% of stablecoin transaction volumes are not from genuine users, challenging the notion of stablecoins revolutionizing the payments industry.
• Out of approximately $2.2 trillion in total transactions in April, only $149 billion can be attributed to “organic payments activity” conducted by genuine users.
• Stablecoin transactions often face the issue of double-counting, depending on the platform to which users transfer funds.

A recent study by Visa and Allium Labs has found that over 90% of stablecoin transaction volumes are not from genuine users, challenging the potential of stablecoins in the payments industry.

Organic Payment Activity Accounts for a Portion of Stablecoin Volume

The data from April indicates that out of approximately $2.2 trillion in total transactions, only $149 billion can be attributed to “organic payments activity” conducted by genuine users. The study’s results suggest that stablecoins are still in the early stages of their evolution as a payment instrument. “That’s not to say that they don’t have long-term potential because I think they do,” Pranav Sood, the executive general manager for EMEA at payments platform Airwallex, said. “But the short-term and the mid-term focus needs to be on making sure that existing rails work much better.”

Stablecoin Volume Faces Double-Counting Issue

Stablecoin transactions often face the issue of double-counting, depending on the platform to which users transfer funds. Cuy Sheffield, Visa’s head of crypto, told Bloomberg that converting $100 of Circle Internet Financial’s USDC to PayPal’s PYUSD on the decentralized exchange Uniswap would result in $200 of total stablecoin volume being recorded on-chain. Visa, a company that handled over $12 trillion worth of transactions in 2020, is among the entities that could potentially lose out if stablecoins become widely accepted as a means of payment.

Conclusion

Despite the challenges, advocates of stablecoins argue that their near-instantaneous transactions and low costs make them ideal for disrupting the payments sector. However, the adoption rate is still low, with many perceiving the technology as not user-friendly enough. As the market continues to evolve, the role of stablecoins in the payments industry remains to be seen.