We knew this would happen.
Once the regulatory environment in the United States became a bit clearer, the major banks would start to pile in.
With the signing last month of the GENIUS Act into law, a lot of banks have announced their intentions regarding the pursuit of crypto and stablecoins. Goldman Sachs, one of the leading investment banks, has now issued a report on stablecoins.
The firm is mum about its intentions regarding crypto. Silence does not mean, however, disinterest. It is likely this bank, like most others, gets involved to some degree. How that is laid out remains to be seen.
In the meantime, the analysts at the bank are looking at the stablecoin industry. Their views mirror many others with the potential growth.
Goldman Sachs Sees Trillions In Stablecoin Potential
The present market cap of stablecoins, $271 billion, is a drop in the proverbial bucket. We are going to see much larger numbers.
Goldman Sachs believes this to the case.
At play is the estimated $240 trillion in annual payments made by Visa. That alone shows how large the market is.
Although mainly used in crypto trading today, Goldman Sachs points to a much wider horizon. The bank’s analysts reference Visa’s estimate of a $240 trillion annual payments market spanning consumer, business-to-business and peer-to-peer transactions. Fortune reports that Goldman expects compliant stablecoins such as USDC to expand quickly, projecting a 40% compound annual growth rate that could add $77 billion in supply by 2027.
This, of course, does not include the banking industry and all the money moved across that infrastructure.
As an aside, this market is so large that we saw a $1.5 billion transaction moved through Ripple's XRP Ledger.
In other words, the global financial system is enormous. The Ripple transaction was done using RLUSD, the firm's in-house stablecoin that is available to institutions.
What do the fees amount to on hundreds of trillions of dollars in transactions? Even a small percentage adds up to large numbers.
This is something that stablecoins seek to replace. By offering a more efficient, i.e. faster and less expensive, service, the disruption could be monumental. The entire plumbing of the financial system is being reworked.
Blockchain can play a major role in this.
RWA Tokenization
Stablecoins are essentially the first step in the tokenization of real world assets. Basically, it can be viewed as either tokenizing deposits if done by a bank. From here, we can branch out to the backing agent, which is US Treasuries.
This is just the starting point. Many Wall Street firms are already experimenting with RWA tokenization. Money market funds, Treasuries, and other financial instruments are finding their way to blockchains.
Instead, these traditional players are expected to aid in mainstream adoption. Leading institutions like Blackrock, Franklin Templeton and BNY Mellon are already tokenizing assets such as money market funds, connecting them to stablecoin rails for faster settlement. Goldman’s Nance and team released the study shortly after strategist Tony Pasquariello reiterated his preference for gold, silver and bitcoin as “stores of value (SOV).”
The ability to accelerate the economy could be upon us. As the rails of finance speed up, the volumes can increase. We saw this with stock markets as digitization (computers) took over. The trading volumes today compared to the 1980s is like night and day. It isn't even a fair comparison.
Every layer of the financial system is looking at a similar transition.
Crypto is going to merge with AI, specifically AI agents. These will not make payments using Visa cards or bank accounts. Instead, they will be linked to digital wallets, containing crypto (most likely stablecoins), to serve as the payment mechanism.
For those agents which have commercial applications, the speed which they will operate comes down to bandwidth. Ultimately, a faster internet equates to a similar path on stablecoin usage.
In other words, the velocity of money can skyrocket.
Goldman Sachs realizes there are trillions of dollars sitting out there. Disruption is upon us in a way that most of us still cannot ascertain. The unfolding over the next 5 years will reveal a completely different infrastructure framework that our financial system operates upon.
Stablecoins are going to be at the heart of this.