The Supply of Stablecoins is Decreasing

Amid widespread industry celebration over PayPal’s recent launch of a stablecoin, marking the entrance of a significant American payment company into the space, it’s noteworthy that the overall supply of stablecoins has been on a decline for more than a year.

Total stablecoin supply has been falling since mid-2022. In 2023, the supply has contracted by approximately 12%, decreasing from $139 billion at the beginning of the year to $122 billion in August.

There’s a growing belief among analysts that this downward trend might be poised for a shift, particularly due to PayPal’s foray into the sector.

Interestingly, regulatory bodies appear to be preparing for an expansion in stablecoin utilization.

In a communication addressed to state member banks with an interest in “issuing, holding, or transacting in dollar tokens to facilitate payments,” the US Federal Reserve highlighted that banks must exhibit appropriate measures to address liquidity and illicit finance risks.