Dollar Dominance in Stablecoins Strengthens as Non-Dollar Share Slips to 0.24%

The supply of non-dollar stablecoins has nearly tripled over the past five years, but their share of the market has slipped.

CoinDesk reported on May 19, citing Artemis data, that the supply of non-dollar stablecoins tied to the euro, yen and Singapore dollar rose to $771 million last month from $261 million in May 2021.

Even so, their market share fell to 0.24% from 0.26% over the same period. That means dollar stablecoins accounted for more than 99% of the overall stablecoin market.

The trend runs counter to the dollar's position in traditional finance. According to CoinDesk, the US currency accounts for 89% of global foreign-exchange trading, 61% of foreign-currency bond issuance and 57% of global foreign-exchange reserves. Those shares have declined gradually over the past decade.

In the stablecoin market, however, the dollar's dominance has strengthened in part because of yields on US Treasuries. Issuers of dollar stablecoins can earn higher returns than issuers of other fiat-backed stablecoins by holding short-term Treasuries as reserve assets.

When those returns are reinvested in liquidity provision, distribution expansion and partnerships, the competitiveness of dollar stablecoins rises further.

The infrastructure gap is also significant. RWAxyz data show tokenized US Treasuries total $15.4 billion, the largest share of on-chain real-world assets. Tokenized government bonds issued outside the US total just $1.4 billion.

CoinDesk said the tokenized US Treasury market is 11 times larger than all other tokenized government-bond tokenization markets combined, allowing dollar stablecoin issuers to tap deep, yield-bearing collateral.