According to a report from Wall Street Giant Citigroup on Friday, Stablecoins play an increasingly important role in both the crypto market and traditional finance.
As Stablecoin usage increases, so does the demand for the US short-term US Treasury Department, but alternatives from money market funds may limit net effectiveness, the report says.
The law under consideration in Parliament could further entrench this trend by requiring the reserves to be held in short-term government debt, the bank noted.
City said the US dollar's dominance in the issuance of Stablecoin reflects its status as a global reserve currency rather than driving it.
According to the bank, dollar-backed stubcoins like USDT remain dominant, backed by a central role in crypto transactions and blockchain-based payments.
Meanwhile, new players like PayPal (PYPL) and Visa (V) are also experimenting with Stablecoin use cases, Citi said.
The potential market is between $1.6 and $3.7 trillion by 2030, but regulatory constraints such as yield restrictions could stifle growth, according to Citi.
Still, the trend in issuing Stablecoin could provide insight into the evolving global financial order, the report added.
read more: US Stablecoin Bill approval could trigger a long-term crypto bull market: Bitise
