Standard Chartered analysts report that stablecoin velocity has doubled over the past two years, driven by new payment use cases and growing traditional finance activity. The finding represents a shift from the bank’s earlier assumption that velocity would remain broadly stable as the stablecoin market expanded. Velocity measures how frequently stablecoins are used relative to the total amount in circulation, meaning faster turnover can support higher transaction volumes without requiring equivalent supply growth.
Geoff Kendrick, Standard Chartered’s head of crypto research, explained the core dynamic in a Tuesday report. He noted that if velocity holds steady, rising transaction volumes would generate demand for additional stablecoins, but if velocity continues to increase, that demand pressure would be reduced. Despite this shift, the bank maintains its existing forecast that the stablecoin market will reach $2 trillion by late 2028.
Kendrick attributed the surge in velocity primarily to a gradual transition toward higher-velocity use cases, specifically traditional finance replacement and transactions involving artificial intelligence. He noted that pre-existing use cases, such as savings in emerging markets, have not seen a comparable increase in velocity. The distinction suggests that new categories of activity, rather than growth in established ones, are responsible for the change.
The rise in stablecoin velocity, which has reached an average turnover of at least six times per month, has been led largely by Circle‘s USDC, the second-largest stablecoin by market capitalization. USDC’s velocity began climbing in mid-2024 across multiple blockchain networks, with particularly notable activity on Solana and Base. Analysts link this acceleration to a shift toward traditional finance applications as well as early AI-driven payments on networks including Coinbase-backed x402.
By contrast, Tether‘s USDt, the largest stablecoin by market capitalization, has maintained relatively low velocity. Kendrick said this reflects USDt’s stronger foothold in the emerging market savings segment, which tends to involve less frequent transactions. The divergence highlights how the two dominant stablecoins appear to serve distinct user bases and use cases.
Kendrick summarized the contrast by noting that the two market leaders each hold different competitive strengths — USDt in emerging market savings and USDC in traditional finance replacement. This differentiation could have broader implications for how stablecoin supply and demand dynamics evolve as the market matures. Standard Chartered’s analysis suggests that supply forecasts may need to account for velocity trends alongside raw transaction volume growth.
Originally reported by CoinTelegraph.
