JPMorgan reiterates it doesn’t see a trillion-dollar stablecoin market by 2028. Here’s why

JPMorgan analysts reiterated that they do not expect the stablecoin market to reach a trillion-dollar scale over the next few years, arguing that growth is likely to track the broader crypto market rather than accelerate far beyond it.

The analysts, led by managing director Nikolaos Panigirtzoglou, noted in a Wednesday report that the stablecoin universe has expanded by about $100 billion this year to over $300 billion, with growth concentrated among the two largest coins. Tether’s USDT added around $48 billion in supply, while Circle’s USDC grew by about $34 billion, accounting for the majority of the increase.

The analysts said this reinforces their long-held view that stablecoin growth is still driven mainly by activity within the crypto ecosystem. As they noted in a July report, most demand comes from using stablecoins as cash or collateral for crypto trading — including derivatives, DeFi lending and borrowing — as well as for holding idle cash by crypto-native firms such as venture funds.

This year alone, derivatives exchanges increased their stablecoin holdings by roughly $20 billion, fueled by a surge in perpetual futures trading, the analysts noted. That activity, they suggested, remains the dominant driver of stablecoin supply growth.

As a result, “the stablecoin universe is likely to continue to grow over the coming years broadly in line with the overall crypto market cap, perhaps reaching $500 billion–$600 billion by 2028, far lower than the most optimistic expectations of $2 trillion–$4 trillion,” the analysts wrote. In their July report, the analysts had projected a more moderate expansion to around $500 billion by 2028. In May, the analysts separately said projections of a trillion-dollar stablecoin market by others are “far too optimistic.”

Citi analysts have projected the stablecoin market could reach $1.9 trillion by 2030 in a base scenario, or up to $4 trillion in a bullish case, while Standard Chartered estimates the market could grow to $2 trillion by 2028.

While payments-related use cases are expanding, the JPMorgan analysts cautioned that this does not necessarily translate into a much larger stablecoin market cap. As stablecoins become more integrated into payment systems, their velocity — the rate at which they circulate — becomes more important than the absolute stock of stablecoins outstanding, the analysts said.

"As payment adoption increases, on-chain activity and velocity will likely rise, reducing the need for a large stock of stablecoin holdings," the analysts wrote. "For example, USDT’s annual velocity on the Ethereum blockchain is around 50. This implies that in a hypothetical scenario where stablecoins facilitate 5% (or around $10 trillion) of global cross-border payments volume annually, the required stablecoin stock would only be $200 billion."

Tokenized deposits gain steam

The analysts also emphasized that banks are not standing still as stablecoins gain traction. Instead, they are increasingly exploring tokenized deposits — digital representations of traditional bank deposits that remain within the regulated banking system and are backed by deposit insurance.

Last month, JPMorgan itself, through its blockchain unit Kinexys, launched its U.S. dollar-denominated deposit token, JPM Coin (ticker JPMD), for institutional clients on Base, the Ethereum layer 2 network incubated by Coinbase, following a successful proof of concept.

“JPM Coin provides JPMorgan’s institutional clients with the option to make onchain native digital payments, which serve as a digital representation of a bank deposit on public blockchain,” the bank said at the time, adding that the initiative is aimed at meeting demand from both crypto-native and traditional firms seeking faster and more efficient money movement.

Tokenized deposits can be bearer (transferable) or non-bearer (non-transferable), though regulators tend to favor non-transferable designs to preserve the “singleness of money” and reduce financial stability risks, the analysts noted.

"Tokenized deposits aim to mitigate risks associated with stablecoins, such as concentration risk and rapid withdrawal during stress events," they wrote.

JPMorgan also pointed to initiatives such as SWIFT’s blockchain-based payment experiments as another factor that could reinforce the role of commercial banks in cross-border payments, potentially limiting stablecoins’ long-term share in institutional settlement flows.

In addition, the analysts highlighted regional central bank digital currency or CBDC projects, including the digital euro and digital yuan, as another competitive force. These initiatives aim to provide regulated digital payment alternatives that could curb reliance on privately issued stablecoins, particularly in institutional and cross-border use cases.

"In all, we continue to anticipate stablecoin growth broadly in line with the overall crypto market universe over the coming years," the analysts concluded. "Greater usage of stablecoins in payments does not necessarily imply a large increase in the required stock of stablecoins. Moreover, blockchain initiatives for institutional payments could reinforce commercial banks’ role in payments via non-bearer (non-transferable) tokenized deposits at the expense of stablecoins."