A recent report by Circle, the issuer of the USDC stablecoin, indicates a significant increase in remittance flows through Asia utilizing USDC. In 2022, transactions amounting to $130 billion were recorded in the region. This stablecoin, tied to the value of the U.S. dollar and backed by liquid cash and cash-equivalent assets, is becoming increasingly vital in the financial landscape of Asia.
USDC: A catalyst for financial inclusion in Asia
The Asia-Pacific region now accounts for 29% of the global digital currency value received, surpassing both North America (19%) and Western Europe (22%). This growth is not solely driven by speculative trading, as previously common with cryptocurrencies. Instead, USDC is playing a critical role in remittances, particularly in countries with large diaspora populations like the Philippines. Circle’s collaboration with Coins.ph, a Philippines-based exchange, aims to tap into the remittance market, estimated at around $36 billion annually.
Moreover, USDC is proving to be a solution to the region’s $510 billion trade finance gap, which represents the shortfall in liquidity available for cross-border transactions and credit. This issue is especially acute in emerging markets with capital outflow restrictions, where securing funding for international trade can be challenging. For instance, Taipei-based XREX utilizes USDC to facilitate financial transactions between countries, exploiting the stablecoin’s liquidity to bridge dollar shortages in Southeast Asia.
Decline in speculative trading and global impact
Interestingly, Circle’s report also reveals a 90% decline in the use of stablecoins for speculative trading over the past five years. This shift highlights the evolving role of cryptocurrencies in the global financial system. In Latin America, for example, 33% of consumers have
used stablecoins for payments, and the region has received a substantial $562 billion in digital currency between 2021 and mid-2022. This trend underscores the growing adoption of digital currencies for practical, everyday financial activities beyond mere investment vehicles.
The increasing use of USDC in Asia and globally signifies a shift in the cryptocurrency landscape. From its roots in speculative trading, stablecoins like USDC are finding a new role in facilitating real-world financial transactions, offering a digital alternative to traditional banking systems. This trend reflects the growing integration of digital currencies into mainstream finance, marking a significant step forward in the global acceptance and utility of cryptocurrencies.
USDC’s rising prominence in remittances and trade finance in Asia and its declining association with speculative trading paint a picture of a maturing cryptocurrency market. These developments are pivotal for the regions involved and the future trajectory of digital currencies worldwide. As USDC and similar stablecoins continue to gain traction in various global markets, their potential to redefine and enhance financial systems remains a key area to watch.
