JPMorgan has cut its prediction of the stablecoin market size. It now predicts that it will be smaller than other analysts had expected and settle at only $500 billion in 2028.
This is a form of projection that is quite below various trillion-dollar perspectives by other institutions, and it indicates how the bank feels about the potential that will be adapted towards using dollar-related digital assets. However, with the recent approval of the GENIUS Act by the Senate, JPMorgan is wary of the rate at which the stablecoin market is expanding.
The bank specifically indicated that the current application of stablecoins is highly limited to crypto trading and DeFi, with little relevance in the real world in terms of payments. Hence, their overall value to the financial sector, which is regarded as the stablecoin market, is currently valued at about 250 billion.
Stablecoin usage remains limited.
JPMorgan estimates that only 6 percent of stablecoin business is related to real payments, compared to 88 percent involving trading, decentralised finance, and crypto treasury activities. This level of concentration implies poor interaction with the mainstream financial system and demonstrates that stablecoins are not on the way to substituting fiat currency in everyday operations.
The bank noted that stablecoins continued to have lower returns than traditional savings assets and that they carried expensive transactions to and from a fiat currency. These concerns make them less desirable as a mainstream financial instrument and instead limit their use beyond digital asset ecosystems.
Industry experts point to regulation as a growth driver
Major players such as Standard Chartered have given a more optimistic projection as JPMorgan continues to cast a gloomy view. Standard Chartered anticipates the stablecoin market will outshine and go above $2 trillion by 2028, with industry experts projecting that a clear regulatory environment under the GENIUS Act will become one of the market’s drivers. The bank considers that clear guidelines may inspire investors’ confidence and cause a significant rise in the issuance and utilization of stablecoins.
The advocates of the bill presented to the Senate claim that robust legal frameworks would narrow the gap between the crypto industry and the traditional financial system. Political forces could also enhance the speed of development in the upcoming years, as former President Trump supported a bill to attempt to control stablecoins.
CBDCs pose challenges to stablecoin expansion
Growth in stablecoins is also not unfavorable in the global environment with governments placing central bank digital currencies and national system upgrades at the top of the priority list. Other nations such as China, Israel, and the European Union, are working on the CBDC with considerable zeal. ECB is currently establishing the technical infrastructure of the digital euro, whereas Russia intends to grow the usage of the digital ruble by the year 2027.
JPMorgan, despite these attempts, states that such models as the e-CNY or even the equivalents of payment systems like Alipay and WeChat Pay do not offer an obvious direction on the route of the stablecoin expansion across numerous jurisdictions.