Stablecoins Are Better Suited Than Bitcoin to Act as Money: MUFG Banks Lee Hardman

MUFG Bank currency analyst Lee Hardman says stablecoins are proving to be a more practical form of money than volatile cryptocurrencies such as Bitcoin.

In a recent market note, Hardman explained that stablecoin growth is drawing more attention because these assets function as a digital form of cash.

Unlike Bitcoin and many other cryptocurrencies, stablecoins maintain a stable value, usually pegged 1:1 to major currencies like the U.S. dollar, euro, or pound, or in some cases to commodities such as gold.

Stablecoins such as $USDC and $USDT are built to avoid the sharp price swings that limit Bitcoins usefulness as everyday money. This stability has made them central to crypto markets. Around 80% of all trades on centralized exchanges are executed using stablecoins, highlighting their role as the backbone of crypto liquidity.

Key Points

• MUFG Bank analyst Lee Hardman says stablecoins work better as money than volatile Bitcoin.
• Dollar-pegged tokens like $USDT and $USDC now power about 80% of crypto exchange trades.
• Stablecoin market cap tops $310B, with nearly 99% tied to U.S. dollar-backed digital tokens.
• Hardman says stablecoins better meet moneys three roles, offering price stability and fast, low-cost payments.

Stablecoins Dominate Crypto Liquidity

Hardman noted that $USDT, issued by Tether, remains the largest and most widely used stablecoin globally. It is pegged to the U.S. dollar and backed by cash and U.S. Treasury bills. $USDT dominates liquidity across Asia, Latin America, and other emerging markets.

It is commonly used for savings, cross-border remittances, DeFi activity, and as a base trading pair across crypto platforms, accounting for more than 70% of stablecoin trading volumes.

Market Cap Surpasses $310 Billion

The total market capitalization surpassed roughly $310 billion earlier this year, with nearly 99% of that value tied to U.S. dollar-pegged tokens. $USDT alone stands at about $184 billion in market cap, while $USDC is near $74 billion.

Stablecoins now represent around 13% of the total crypto market, a share Hardman expects to rise over the next decade. Some estimates suggest the sector could grow to between $2 trillion and $4 trillion by 2030.

Chart by MUFG Bank

Fulfilling the Three Functions of Money

According to Hardman, stablecoins are better positioned than Bitcoin to fulfill the three main functions of money: a medium of exchange, a unit of account, and a store of value.

Their price stability makes them easier for merchants and users to accept, as there is less risk of value loss during transactions. They also enable near-instant global payments, operate 24/7, and typically carry lower fees than traditional banking or card networks.

As a result, stablecoins have become the preferred medium of exchange within digital environments, widely used for trading, lending collateral, and payments.

Hardman added that their appeal could be even stronger in high-inflation economies, where access to stable, dollar-linked digital cash can offer a practical alternative to weakening local currencies.