HomeNewsBitcoin and Stablecoins Gain Ground: Threatening Visa and Mastercard's Dominance

Bitcoin and Stablecoins Gain Ground: Threatening Visa and Mastercard’s Dominance

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  • The global settlement value of stablecoins has reached $7 trillion, almost half of the combined $14 trillion settled by Visa and Mastercard.
  • Latin America is driving stablecoin adoption, offering blockchain-based financial services to the underbanked population and SMEs.

The global stablecoin market is making significant strides, rapidly encroaching on the traditional settlement industry dominated by giants like Visa and Mastercard. A recent report by Circle, the issuer of the USDC stablecoin, reveals that stablecoins have reached a global settlement value of over $7 trillion, nearing half the amount settled by Visa and Mastercard combined.

Emerging Trends in Blockchain-based Financial Services

Circle’s insights indicate that blockchain infrastructure is poised to handle an increasing volume of economic activity worldwide. This shift is particularly evident in Latin America, where blockchain-based financial services are gaining momentum. The region is expected to become a major adopter of regulated blockchain solutions for savings, payments, and credit, catering to millions of businesses and billions of people.

Latin America Emerges as a Key Player in Global Stablecoin Adoption

Latin America has emerged as a key driver in the adoption of digital currencies and financial technology, with its influence in the domain comparable to North America’s impact on the original internet. The region, home to approximately 658 million people, boasts a robust developer base of nearly one million, significantly contributing to its growing prominence in the global stablecoin market.

Fintech and Financial Inclusion in Latin America

The rise of fintech in Latin America is closely linked to its potential in reducing income inequality. Remarkably, three-quarters of the 30 million digital bank customers in the region were previously unbanked or underbanked, including small and medium enterprises. This surge in fintech adoption is supported by regulatory frameworks that have allowed the fintech sector to double in size, encompassing around 2500 platforms. These developments make Latin America a natural hub for broader stablecoin adoption.

Stablecoins Gaining Ground in Consumer Markets

In Latin America, stablecoins are increasingly entering the consumer market, enhancing the purchasing power of individuals. As Central Bank Digital Currencies (CBDCs) continue to gain popularity, Circle is focusing on fostering financial interoperability both locally and globally. They aim to achieve this by building infrastructure through compliant stablecoins and blockchain-based solutions.

Circle’s Role as a Key Infrastructure Provider

Circle’s USDC stablecoin, launched in 2018, has rapidly become one of the most liquid and widely held digital currencies globally. With daily transactions averaging around $4 billion and nearly 2 million users across over 190 countries, USDC is a fully reserved digital currency, backed 100% by highly liquid assets and redeemable 1:1 for US dollars.

The USDC reserve includes investments in the Circle Reserve Fund, managed by BlackRock and regulated by the SEC. While the majority of stablecoin activity currently revolves around the US dollar, facilitating trade invoicing and other financial operations, Circle anticipates the introduction of more non-dollar stablecoins in the future. Following this trend, they launched EURC, a euro-backed stablecoin, in 2021, operating on the same full-reserve model as USDC.

The stablecoin market’s rapid growth, particularly in regions like Latin America, signifies a paradigm shift in global financial services, challenging traditional payment systems and fostering greater financial inclusion. With stablecoins like USDC at the forefront, the future of digital currency and blockchain technology in global finance looks increasingly promising.

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Ralf Klein is a computer engineer specializing in database technology, and as such, he was immediately fascinated by the possibilities of blockchain when he first heard about it, especially since this distributed, tamper-proof technology can be the foundation for much more than just cryptocurrencies. At ETHNews, he translates the articles of his English-speaking colleagues for the German readers. Business Email: info@ethnews.com Phone: +49 160 92211628