J.P. Morgan's Conservative Outlook on Stablecoin Growth

J.P. Morgan forecasts stablecoins will grow modestly to $500 billion by 2028, contrasting with more optimistic trillion-dollar predictions. Despite interest from fintechs and banks in speeding up payments, stablecoin adoption remains constrained by limited demand and regulatory challenges, with most usage still tied to crypto trading and decentralized finance.

In a recent report, J.P. Morgan projected that the stablecoin market would expand to $500 billion by 2028, dismissing other estimates that suggest the market could surpass a trillion dollars as overly optimistic. The brokerage cited minimal mainstream adoption of stablecoins, which are primarily pegged to the U.S. dollar.

Though stablecoins have piqued the interest of fintech firms and banks for fast payments and settlements, regulatory hurdles continue. The U.S. Senate's recent passage of the GENIUS Act signals a push for regulatory clarity, while other forecasts from Standard Chartered and Bernstein predict more aggressive growth for stablecoins.

Despite the spotlight on stablecoins, J.P. Morgan noted that demand remains modest, making up just 6% of current transactions. The bulk of stablecoin activity still centers on cryptocurrency trades, decentralized finance, and collateral use, with international growth hampered by regulatory fragmentation and a focus on national digital currencies.

(With inputs from agencies.)