America’s stablecoin usage is declining, Chainalysis reveals

The use of stablecoin in America has been seeing a drastic decline, according to a report by American firm Chainalysis. Despite several milestones in the crypto sector in America, the country is losing its hold in stablecoin transactions.

According to Chainalysis, the decline began in February, in comparison to the upward momentum it maintained coming into 2023. Stablecoin usage has increased greatly, especially in locations with emerging markets. Transactions on platforms that are not under US regulators have also increased drastically.

Non-US markets experience a major boom

USDC parent company Circle recently revealed that there has been a surge in the demand for dollar-backed assets outside the United States. The report revealed many of these users are located in countries where their currencies are bad and they cannot access traditional banking services, hence relying on the assets.

According to a Circle representative, the Federal Reserve said that about $1 trillion of US bank notes are held outside the country. In context, that is about two-thirds of $100 bills and 45% of all the banknotes in the United States.

Over the last few months, stablecoin projects have been springing up in Europe. This is due to the Markets in Crypto-Assets (MiCA) regulation that took effect in June.

MiCA has been able to provide the projects with legal standing, something that the United States has failed to do. If this continues unchallenged, then the US might lose control over the on-chain movement of the dollar. With the US still dragging its feet, other countries are looking to set the standards a typical example is the case of the Eurodollars.

US policymakers were not serious about the market before it grew into something very big internationally. With the current development, there is a chance for history to repeat itself.

With both political parties accepting that the development is bad, there is a huge question mark looming over who will step up.

However, there has been some movement in the regulatory space. In July 2023, the House of Financial Services Committee pushed a stablecoin bill. It included several aspects like Anti Money Laundering, Counter Terrorism Funding, and sanctions to issuers that will help stablecoins remain relevant globally.

Latin America’s crypto space is booming

Latin America has been enjoying relative success in the stablecoin sector. Stablecoin adoption has increased drastically with over $415 billion pulled in from July 2023 to June 2024.

Stablecoin adoption is growing in the region, with Brazil and Argentina raking in $90 billion and $91 billion, respectively. Brazil rebounded after a subpar 2023. Institutional investors have also been involved, being responsible for over $1 million.

Bitcoin has also become a go-to asset, with its usage skyrocketing around March 2024, the same period that the SEC approved spot Bitcoin ETFs.

Meanwhile, Argentina has been dealing with inflation, the figures hitting 143% in the second half of last year as the currency continued to fall. By December 2023, the president rolled out measures to help the currency.

Another country that has endured a bittersweet relationship with crypto is Venezuela. The country went from hyping a potential state-backed crypto to failing to launch it before it started a crackdown on mining.

Crypto remains a lifeline for Venezuelans in the face of the fall of the country’s currency. Year-over-year growth is around 110%, making it the best crypto market in Latin America.

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