Brevan Howard Digital: 2022 stablecoin volumes were almost equivalent to Visa

Brevan Howard Digital published a useful analysis in a report, “The Relentless Rise of Stablecoins”. One of the key findings is that in 2022 there were $11 trillion in onchain stablecoin transactions, compared to Visa’s $11.6 trillion.

Yes, we know, it’s not quite comparing apples with apples. People who trade high volumes of securities don’t pay using Visa, whereas a large proportion of crypto transactions are financial. Still, it’s a big number. And it supports PayPal’s interest in joining the party by issuing a stablecoin, given its transaction figure was $1.4 trillion.

Lot’s of retail usage?

The research was based on analyzing blockchain transactions, and it found around five million stablecoin addresses are active each week. Three quarters of these transact less than $1,000 week, “indicating that small/retail users likely represent the majority of stablecoin users.” Many will be paying for financial transactions as opposed to real world usage such as P2P payments. But there are certainly a reasonable amount of the latter.

There’s one caveat re the retail transactions: it’s provided the blockchain data doesn’t include large volumes of questionable transactions.

Since the end of 2021, stablecoin transaction volumes have dropped only 11%, compared to centralized exchange volumes, which are down 64% and decentralized exchange volumes that have declined 60%. 

This is consistent with self hosted wallet holdings currently at an all time high, whereas exchange and smart contract holdings are down 40% from all time highs.

On the whole, Brevan stuck to observations rather than interpretation, with one or two exceptions. Circle claims that more than 70% of USDC is held outside the United States, and Brevan observed that the Tether proportion is probably higher. That’s reinforced by our next point.