Standard Chartered: "Rising stablecoin velocity... new issuance demand may be capped"

Stablecoin transactions are growing rapidly, but an analysis suggests that demand for new issuance may be more limited than expected as usage speed (velocity) rises.

According to crypto-specialist media outlet Cointelegraph on the 31st, Standard Chartered said in a report that "stablecoin velocity has doubled over the past two years" and that "even if transaction volumes increase, it may not necessarily be a structure where supply expansion must accompany it."

Velocity is an indicator of how frequently stablecoins are used relative to the amount outstanding. If the same stock circulates faster, more transactions can be processed without additional issuance.

Geoff Kendrick, Standard Chartered's head of digital assets research, explained: "If velocity is constant, rising transactions translate into rising demand, but if velocity increases, the total supply required can decline."

The analysis also diverges from prior assumptions. Standard Chartered had previously expected velocity to remain largely unchanged even as the market expanded, but it said structural change is now emerging as usage tied to payments and integration with traditional finance (TradFi) increases.

In particular, new use cases such as AI-driven trading and on-chain payments were found to be driving the increase in velocity. By contrast, velocity changes were limited in legacy use cases where stablecoins are used as savings tools in emerging markets.

By stablecoin, USDC was found to be leading the rise in velocity. Expanded use on networks such as Solana and Base has increased usage centered on payments and functions substituting for traditional finance. USDT, meanwhile, is maintaining relatively low velocity, underscoring its role as a savings and store-of-value instrument.