A recent report by Visa and Allium Labs has raised eyebrows in the cryptocurrency community by revealing that over 90% of stablecoin transactions are not from genuine users. This finding has sparked a debate about the actual adoption and utility of stablecoins, as well as the motivations behind the report itself.

According to Cuy Sheffield, Head of Crypto at Visa, the total transactions involving stablecoins as of April 24 in the last 30 days amounted to a staggering $2.65 trillion. However, only $265 billion were identified as originating from "organic payments activity," highlighting a significant gap between reported and authentic usage.

This discrepancy has raised questions about the true nature of stablecoin transactions. One potential explanation lies in the prevalence of bots and automated trading activities in the crypto space. These bots can execute transactions at high speeds and volumes, skewing the perception of real user adoption and usage patterns.

Additionally, the flexible nature of blockchain networks allows for a wide range of automated transactions, making it challenging to differentiate between transactions made by real users and those driven by automated processes.

Another factor contributing to the discrepancy in stablecoin transaction volumes is the double-counting of transactions. For instance, converting one stablecoin to another on an exchange would result in two recorded transactions, inflating the overall volume.

Visa and Allium Labs have applied filters to identify and exclude such inorganic activities, including a single-directional volume filter and an inorganic user filter. Despite the significant difference between total transfer volume and bot-adjusted transfer volume, the analysis revealed a consistent increase in the number of monthly active stablecoin users, indicating a steady growth trend.

Interestingly, Visa's analysis also revealed a striking growth in the usage of USD Coin (USDC) over the past eight months, outpacing the market dominance of Tether (USDT) in terms of actual transactions. This trend suggests that while USDT remains the dominant stablecoin by market capitalization, USDC's usage in real-world transactions is on the rise.

While some experts have criticized Visa's methodology, arguing that the data may include legitimate businesses utilizing stablecoins, others have praised the report for highlighting the need for improvement in existing payment systems to ensure their effectiveness.

The rise of stablecoins in facilitating cross-border payments is undeniable. According to market research firm Sacra, the volume of stablecoin transactions has surged from $26 billion in January 2020 to a staggering $1.4 trillion in April 2024 and could potentially surpass Visa's total payments volume in the second quarter of 2024.

Stablecoin transactions are processed within minutes and at significantly lower costs compared to traditional systems, making them attractive for various use cases.

Major banks and payment processors, including Wells Fargo, JPMorgan Chase, Visa, and Mastercard, are exploring the use of stablecoins to enhance their payment infrastructure, indicating a recognition of the potential benefits of this technology.

While Visa's report has sparked debate and raised questions about the true adoption and utility of stablecoins, it also highlights the growing importance of these assets in the global financial landscape. Whether Visa's intentions were to state facts or undermine potential competition remains a matter of interpretation.

As the cryptocurrency industry continues to evolve, it is crucial to maintain transparency and foster open dialogue to address the challenges and opportunities presented by emerging technologies like stablecoins.