Stablecoins were once used primarily for cryptocurrency trading, but today they have become a multifunctional tool for everyday use.In a new report, analytics firm Chainalysis found that transactions with stablecoins account for ⅔ of the total transaction volume in the crypto market.Expertspointed out that this type of cryptocurrency is a crucial element in integrating blockchain products into the financial system and economy.

"They provide a reliable medium of exchange, a store of value, and a bridge between traditional finance and cryptocurrency. Stablecoins enable much of the activity in decentralized finance (DeFi), cryptocurrency exchanges, and cross-border payments," the report says.

Chainalysis identified the main areas where stablecoins emerged as the main use case in the crypto market.

DeFi

Stablecoins have become the basis for many decentralized finance applications, facilitating the lending process. The stability of their peg to a currency or asset's exchange rate makes them ideal for maintaining efficiency in such markets.

The stability of the exchange rate of such coins allows users in economically unstable regions to access financial products. For example, in some countries in Latin America and Africa, users use stablecoins as a tool to hedge against the inflation of their national currencies.

“In these regions, retail adoption will be driven by their practicality for low-cost transfers, the security of savings in regions with volatile currencies, and the availability of DeFi,” Chainalysis analysts wrote.

P2P transactions

According to analysts, stablecoins are increasingly being used for everyday payments and P2P transfers. Experts attribute this to the ability to process transactions quickly and inexpensively. And often with minimal fees compared to traditional banking systems.

P2P (peer-to-peer or person-to-person) transfers are money or other transfers from one user to another without the need to involve an intermediary, such as a bank. Thus, stablecoins have become an easy and secure way for people to exchange value.

“This is particularly valuable in regions with limited access to reliable banking systems,” the report says.

Money transfers

Stablecoins offer a faster and cheaper tool for money transfers compared to traditional options, which often come with high fees and slow processing times, Chainalysis wrote.

“Migrant workers, who are often unbanked or underbanked, are using stablecoins to send money home to their families, and companies are using them to pay international bills,” the report said.

Analysts also concluded that they simplify transactions for importers and exporters by creating a stable and transparent environment for international trade, especially in regions with limited access to foreign exchange. According to them, stablecoins bypass the inefficiencies of traditional banking systems and facilitate international integration.

Illegal operations

Due to global adoption, stablecoins have become one of the priority areas of the crypto market for regulators around the world. Governments and regulators are faced with the challenge of creating the conditions to support innovation while ensuring high-quality standards to combat money laundering and terrorist financing.

Although Chainalysis estimates that less than 1% of all transactions are illegal, they are still used for terrorist financing, sanctions evasion, theft and hacking, cybercrime and fraud.

“Their stability and global availability make them attractive tools for attackers seeking to circumvent financial controls and evade detection,” they wrote in the report.

Chainalysis believes that illegal use of stablecoins is a bad idea due to the transparency of the blockchain as a public ledger for cryptocurrency transactions. This architecture allows all participants to track cryptocurrency transactions and fund movements between wallets online and at any time.

In addition, many centralized stablecoins have tools for locking assets on a specific wallet at the blockchain level. Therefore, most centralized stablecoin issuers have the ability to freeze or permanently delete ("burn") cryptocurrencies in users' wallets. Stop illegal transactions and help recover stolen funds.

According to analysts, this entire set of features allows stablecoins to be viewed as an asset with the potential to transform the economy and the financial system: “Their continued development will play a central role in determining the future of cryptocurrencies and traditional finance.”

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