Stablecoin growth has stalled. The payments boom hasn't

Stablecoins have barely grown in supply this year. But the money already circulating through their networks is being used for more payments than ever.

The total value of stablecoins outstanding rose just 0.4% to $305 billion in the first nine months of 2026, according to blockchain data firm Allium. Over the same period, payments involving those tokens climbed 45% to $482 billion, while the number of transactions jumped 71% to 1.04 billion.

Circle, the issuer of the second-largest stablecoin, reported a similar divergence in its third-quarter earnings Wednesday. USDC's circulating supply ended September at $73.9 billion, unchanged from a year earlier, even as on-chain transaction volume surged 49% to $13.9 trillion.

“Balances were flat, but usage continues to grow,” CEO Jeremy Allaire said on the company's earnings call. The transfer figure, however, includes trading and other blockchain activity and should not be confused with payments to businesses or consumers.

Stablecoin supply and payments. (Allium/CoinDesk)

The divergence has complicated expectations for an industry that entered 2026 anticipating rapid expansion.

At the start of the year, stablecoins, digital tokens with values pegged to fiat currencies such as the U.S. dollar, looked like a sure bet. Their supply had just grown about 50% in 2025, and the industry believed the run would continue. SharpLink CEO Joseph Chalom predicted a $500 billion stablecoin market by the end of 2026. Solana co-founder Anatoly Yakovenko went further, saying it could top $1 trillion with increasing adoption in both real-world use cases and trading.

Fast forward to today, supply hasn't budged. Outstanding stablecoin balances have been stuck between $300 billion and $320 billion over the past 12 months. Standard Chartered also recently pushed its forecast for a $2 trillion stablecoin market to 2030 from 2028, citing slower growth in supply.

Yet analysts and stablecoin executives say the flat market capitalization doesn't necessarily mean adoption has stalled. It may instead reflect a shift in how the tokens are used: fewer dollars being added for cryptocurrency trading, even as existing balances facilitate more payments.

Stablecoin supply measures the dollar value of tokens outstanding, not how often they are used. As a result, growing payment activity doesn't automatically require an equivalent increase in issuance.

"Stablecoin supply tells us how much is outstanding, but not necessarily how actively it is being used," said Tianwei Liu, CEO and co-founder of StraitsX, a Singapore-based firm that issues the XSGD and XUSD stablecoins and runs card programs that let people spend stablecoin balances on everyday purchases.

"As stablecoins become more embedded in everyday payments, the same pool of liquidity can support significantly more transaction activity without requiring supply to grow at the same pace," Liu added.

Essentially, stablecoins are increasingly used in two ways: as dollar-denominated assets held for trading, savings, or collateral, and as instruments for moving money between people and businesses.

Same dollar, many payments

Picture a single $1 note passed around a table of 10 people. Each one uses it to pay the next. By the end of the round, there's still only one dollar on the table, but it has paid for $10 worth of stuff.

That, in a nutshell, is what's happening with stablecoins. Economists call it velocity, or how many times the same token changes hands in a given period, and it's where stablecoin adoption shows up.

Allium's data backs that.

The average stablecoin payment fell to $462 from $544 in the first nine months of the year, even as overall payment value rose, indicating that growth came partly from more frequent, smaller transactions. September alone saw a record $72 billion in payments.

The pattern is particularly relevant to cross-border transactions, where stablecoins can serve as a temporary bridge between currencies. A business converts its local currency into a stablecoin, sends it overseas and has it exchanged for another currency at the destination.

The industry calls this a stablecoin sandwich. The tokens may remain in circulation and be reused rather than requiring a fresh issuance for each payment.

"The token is in circulation for minutes or hours. Payment growth adds very little net issuance, even as it adds a lot of volume," said Abdulaziz Kanoo, co-founder of ARP Digital, a digital assets trading and investment firm serving clients across the Gulf.

Payment providers are reporting similar patterns in their own operations. StraitsX said daily transactions across its stablecoin-backed card programs climbed from roughly 66,000 in January to 291,000 in October, with customers spending an average of about $54 on purchases such as food, groceries and transportation.

Those figures reflect activity in StraitsX's programs, not the entire stablecoin market. But they illustrate how stablecoin balances can support ordinary consumer purchases, sometimes through existing card networks rather than direct blockchain payments to merchants.

Ray Yang, CEO and co-founder of Singapore-based stablecoin card provider WasabiCard, said its enterprise client base had grown from 500 to more than 700 since May.

"Payments just don't need much new supply, because the same dollar can be used many times," Yang said.

Circle's own payments business offers another measure of the shift. The company said its Circle Payments Network reached an annualized transaction-volume rate of $41.3 billion at the end of September, more than 15 times its year-earlier level. By Oct. 30, the rate had exceeded $58 billion, Allaire said.

Those figures are based on recent payment activity projected over a full year, rather than transactions actually processed over 12 months. Still, they provide a payments-specific measure distinct from the much larger volume of USDC moving across blockchains.

Standard Chartered has also pointed to faster turnover. The bank estimates that overall stablecoin velocity — the measure of how frequently outstanding tokens are transferred — has doubled to around 30 times a month this year, up from 15 times a month in 2025. Raw onchain transfer value counts every transfer recorded on the blockchain, including exchanges moving their own funds and automated trading bots. It averaged just shy of $10 trillion a month this year, up from $4 trillion in 2025, and hit a record $19 trillion in May, the bank said.

Stablecoin changing hands faster. (Standard Chartered/CoinDesk)

Most of that speed-up comes from Circle's regulated USDC, the second-largest stablecoin, whose velocity climbed to around 80 times a month from 45. The largest stablecoin, Tether's USDT, stayed near seven because it mostly serves as dollar savings in emerging markets, where balances are held rather than spent.

"The main outcome of this segmentation so far has been higher velocity – more transactions with the same number of coins," wrote Geoff Kendrick, Standard Chartered's global head of digital assets research.

Not every transfer is a payment

However, there is a caveat to these transaction numbers.

Blockchains record the movement of tokens, but not every transfer represents a customer paying a merchant, a business settling an invoice or money moving between unrelated parties.

Allium counted $97.9 trillion in raw stablecoin transfers in the first nine months of the year. Only $482 billion of that, or about 0.5%, was payments.

The figures show why spectacular blockchain volume numbers may exaggerate the extent to which stablecoins are used in the wider economy. They also show that measured payments are growing from a much smaller base than the raw data suggests.

"I would be cautious about this argument as it is commonly made. It generally relies on raw transfer volume, which includes exchanges moving their own funds between wallets and automated activity recycling the same dollars repeatedly," ARP Digital's Kanoo said.

The Bank for International Settlements made the same point in its June working paper, which found that treating every stablecoin transfer as a standalone payment misclassified almost six in 10 transfer events, overstating both counts and volumes.

AI agents won't fill the gap either

One payment use that has drawn plenty of attention this year is agentic payments, where AI software shops or pays for goods and services on a user's behalf. It is often pitched as a natural fit for stablecoins, but experts say agents too will add transactions, not stablecoin supply.

"Agent balances are small, capped and designed to turn over quickly. Agentic commerce will generate transaction counts rather than float, and anyone expecting it to lift market capitalization has the relationship the wrong way round," Kanoo said.

Aurora Labs CEO Declan Hannon said an AI agent paying just in time won't maintain a balance for long. It funds the purchase, pays and is done. "So even when agentic payments work, they'll show up in volume long before they show up in supply," he said.

The early setups show why. On Oct. 26, Stripe's Link began rolling out USDC-funded balances that allow eligible U.S. users of the Instinct shopping agent to make purchases without approving each checkout. When the agent buys something, Link turns that balance into a single-use virtual card, issued through Stripe's card-issuing service, so the merchant receives an ordinary card payment. The stablecoin funds the agent, and the card does the paying.

A purer version runs on x402, an open protocol developed by Coinbase that lets AI agents pay websites and services directly in stablecoins, without a card.

Even as agent payments multiply, the money involved stays tiny. Allium counted 68.3 million agent payments in the third quarter, double the previous quarter, worth just $3.7 million in total. That's about 5 cents a payment.

Why so small? Builders say moving the money is the easy part. The hard part is everything around it.

"Moving money onchain is becoming easier. The bigger challenge for agentic payments is establishing the trust and controls. Before businesses can adopt agentic payments at scale, they need clarity on who authorizes an agent to spend, what limits apply, and who is accountable if something goes wrong," Liu said.

Hannon said crypto still lacks the safeguards card networks took decades to build. "Refunds, disputes, accounting, getting money back into a bank account. Card networks spent decades building that layer. Crypto has mostly built the rail," he said.

Cost is another hurdle. Network fees and compliance checks don't shrink with the size of a payment, which hurts most when the payment is a few cents.

"On a $10 million trade, those costs are a rounding error. On a $50 purchase, they can wipe out the savings that were the point of using stablecoins in the first place," Kanoo said. "Payment-focused chains and protocols like x402 are bringing those costs down, and as compliance and wallet infrastructure catch up, retail and agentic adoption will follow."

Even then, the experts say, agents will mostly add more payments rather than more stablecoins.

Why supply stalled

Most stablecoins are minted to fund crypto trades and to serve as collateral in derivatives trading and decentralized finance. So when interest in trading drops, demand for new stablecoins falls, and that's what happened this year.

"With trading volumes down more than 50%, the reduction in demand for trading-related stablecoin liquidity has had a meaningful impact on net issuance. I would expect some of this demand to recover as market participation and trading activity improve," Howard said.

Standard Chartered's Kendrick sees it the same way. "We believe this sideways movement is cyclical rather than structural," he wrote. He noted that past periods of flat or falling supply ended once crypto markets recovered.

This downturn has also looked very different from the last one. Stablecoin supply has slipped about 5% from its May record of $322.4 billion, even as bitcoin, at one point early this year, was down more than 50% from its October 2025 peak. In the 2022 bear market, the market capitalization of major stablecoins fell 26%, from about $166 billion in March 2022 to $122 billion by September 2023, according to RWA.xyz.

"In 2022, supply contracted by roughly a quarter when prices fell, because the balances were sitting on exchanges waiting to be deployed. The fact that they have largely stayed this time suggests a considerable share of the float is now held for purposes that have nothing to do with the next trade," Kanoo said.

Circle's latest figures also illustrate how substantial flows can leave outstanding supply little changed. During the third quarter, the company reported minting $104 billion of USDC and redeeming another $104 billion. The newly created tokens were roughly offset by those returned to the issuer, leaving little net issuance despite $208 billion in combined activity.

Still, the shift from trading to payments hasn't been large enough to replace all the demand that has disappeared.

"Payments growth hasn't yet been large enough to make up for lower trading demand," Yang said.

The second reason is yield, and unlike trading, it won't reverse when prices recover. Three-month Treasury bills yield around 4.1%, which makes a token that pays nothing costly to hold. The GENIUS Act, the U.S. stablecoin law that bars issuers from paying interest to holders, takes effect in January 2027.

"GENIUS did not kill yield. It moved it one layer up," said Jason Dehni, co-founder and CEO of BlackOpal, which offers asset-backed finance in emerging markets.

"The issuer cannot pay you, so the application does, and that is why tokenized Treasuries and credit vaults kept growing through a year when supply flatlined," he added.

For now, growing payment activity hasn't been enough to offset weaker demand for stablecoins used in trading. The result is a market in which transactions are multiplying even as the amount of money held in the tokens barely changes.

For Aurora Labs' Hannon, the apparent contradiction comes down to two businesses moving in different directions.

"What's worth separating out is that the flat line is the trading side going quiet. It isn't the payments side failing. Those are two different businesses sharing one chart," he said.