New Report Analyzes the State of the Stablecoin Market

"The holy grail of stablecoins is to become the decentralized central bank for the Internet. Only with true decentralization can the needs of people in emerging markets – especially those living under authoritarian regimes – be met without fear of these stable currencies being shut down," the report states. "While stability is currently assumed to be tethered to the USD, in the future it is expected that the stability of stablecoins will be tied to a diversified basket of tokenized assets rather than the USD."

Nevin Freeman, CEO of Reserve, says the sector needs stronger collaboration among projects and a focus on solving genuine challenges in communities where these tools matter most. "Working together, 2019 can become the year that stablecoins evolve to become the usable, global, digital currency that the world so desperately needs," Freeman said.

Freeman pointed to how cryptocurrency falls short. "The world needs a stable, digital currency that gives people autonomy and control of their money globally," he said. "Cryptocurrencies like Bitcoin emerged with the goal of fulfilling this global need – but the high volatility of today's cryptocurrencies hinders their usefulness. Today, people in emerging economies need a way to protect their money, a way send money to/receive money from their families in other countries, and merchants need a stable means of exchange in which to do business. The stablecoin market is focused on fulfilling those needs."

Since 2018, companies including Facebook and traditional banks have built their own stable currencies. According to the Stablecoin Index, over 50 stablecoin projects exist. JP Morgan announced the JPM Coin last week—a stablecoin that tracks the U.S. dollar. The bank built it using blockchain technology, allowing instant transfers between institutional accounts. JP Morgan will extend the JPM Coin to other major currencies over time.