Citi predict 2025 is when stablecoins explode!

Surfing as usual, I stumbled across a new report by Citi talking about Digital Dollars, and how banks and public sector would drive blockchain adoption.

So, what does the digital dollar mean?

Citi’s view is that “2025 has the potential to be blockchain’s ‘ChatGPT moment’ for adoption in the financial and public sectors. A supportive US regulatory stance on blockchain is expected to be the driver of what could be a game changing year. This could lead to greater adoption of blockchain-based money and spur other use cases, financial and beyond, in the US private and public sector. Another potential catalyst is an ongoing focus on transparency and accountability in public spending.”

But what does that mean for business?

Choices.

The choice between investing in stablecoins tied to fiat currencies, digital coins issued by central banks and digital tokens issued on the network as decentralised network such as bitcoin and ether. The old argument between CeFi and DeFi which I have referenced often.

Citi believe stablecoins will be the big deal, based on this report, and forecast that stablecoin supply could reach $1.6 trillion by 2030 in the base case, and up to $3.7 trillion in a bull case. Today, stablecoins already total $230 billion, which is a 30 times increase over the past five years, and stablecoin transactions have doubled over the first quarter 2025 to $650-700 billion transactions per month.

It does not mean it will be an easy ride, as there are still barriers to adoption. In particular, there is significant geopolitical resistance to “dollarisation” and the widespread adoption of the USD as the core currency. There are also risks with stablecoin. For example, in 2023 there were over 600 large-cap de-pegging events recorded along with some major regulatory fragmentation.

If true, stablecoin issuers could hold over $1 trillion in U.S. Treasuries by 2030, becoming some of the largest holders globally and potentially larger than the holdings of Japan or China.

Nevertheless, even with these factors, Citi expect that stablecoins will underpin global B2B payments, consumer remittances, institutional trading, and interbank settlements, with B2B alone potentially representing 20-25% of the total stablecoin addressable market.

They also state that the US dollar will still be the dominant resrevbe currency, and estimate that about 90% of stablecoins will still be USD-denominated in 2030. This is despite efforts by other regions like Europe and China promoting alternative CBDCs.

Talking of CBDCs, governments are also looking at the use cases for blockchain technologies to improve public sector efficiency. Key use cases include real-time public spending tracking, subsidy disbursement, land records, humanitarian aid, and digital identity.

The bottom-line is that there is a view that blockchain and stablecoins are poised to become core infrastructure for both finance and public sector operations during the next five years. Stablecoins could reshape global liquidity and treasury markets, while blockchain can solve critical problems of trust, transparency, and efficiency in government services and, most importantly, 2025 could be remembered as the year digital finance truly became mainstream. Could is based upon the barriers to success which include regulatory clarity, technological scalability, and overcoming geopolitical resistance.

Citi conclude that “globally, government processes broadly remain a series of discrete, siloed steps, which are still dependent on large amounts of paper and manual work. Blockchain offers significant potential to replace existing centralised systems with streamlined operational efficiency, better data protection and reduced fraud.”

I would agree with them, and the question is whether 2025 is the year that blockchain breaks through or not.

The report is interesting and well worth a read.