Binance Research: Massive Stablecoin Adoption, Risks, And Potential Growth Drivers for Cryptoasset Industry

The recent report conducted by Binance Research reveals a new institutional market insight distributed to large institutional and VIP clients using some of the services offered within the Binance ecosystem, and with a partial focus on stablecoins.

Who are Binance’s key institutional clients?

Binance reported their surveyed clients are agents of investment portfolios, including crypto assets allocations ranging from ~100K to >25M (in USD). They represent varied viewpoints from independent traders, proprietary trading firms, investment funds, crypto-project teams, investors entities, OTC brokerage firms, and sell-side financial institutions. The study was conducted in Mandarin and English.

In addition, this report showed that 35% of respondents are crypto-focused with more than 80% crypto assets allocation, while the majority also invest in different asset classes such as equities, currencies, fixed-income products, real estate, and goods.

There is massive stablecoin adoption

Binance collected its stablecoin data from 69 in total 76 of its clients.  By Binance’s efforts, the survey does give some insight into the market.

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Stablecoin use (in % of the total responses) according to clients (69 respondents) | Source: BinanceResearch

The results of the survey show that there is massive stablecoin adoption. We can see that USD Tether (USDT) remained the most widely used stablecoin (40%), holding the top ranking for both Chinese & English survey respondents, for reasons referred such as greater liquidity and higher market capitalization than other stablecoins. USDCoin (USDC), TrueUSD (TUSD), Paxos (PAX) are following close behind USDT: USDC ranks #2 with 19% usage, while TUSD and PAX both reach 13 percent. Meanwhile, MakerDAO Dai (DAI), Gemini USD (GUSD), StableUSD (USDS), and Binance USD (BUSD) have adoption rates of 6% or less.

Besides, in this report, Binance shows that exchange-backed stablecoins as alternative options like USDC (Coinbase, Circle) and BUSD (Binance), seemed to “spark more prominent interest from many respondents than other (than USDT) fiat-backed competitors.”

Risks and potential growth drivers for the crypto-asset industry

Binance’s report focuses on indicating risks and potential growth drivers according to client responses for the crypto assets industry.

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Largest five risks according to client responses (60 respondents) | Source: BinanceResearch

Binance announced:

“Nearly half of the clients ranked platform-specific failure (…) as the top risk for the crypto-asset industry. Past exchange failures (e.x., Einstein Exchange or MtGox), remain a top concern as most trading activity remains on centralized platforms.”

While Binance observed that 43,3% of respondents are concerned about Tether’s ongoing legal issues. Moreover, respondents seem to be more watchful over global regulatory uncertainty (38.3%) than potential domestic regulatory changes (21.7%).

Binance suggests the reason for this:

“This rate could relate to the relative ease of changing domestic registrations while facing the impossibility of not complying with regulations set at a supranational level.”

Besides, Binance also reported growth drivers according to client responses in the below table.

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Largest six growth drivers according to client responses (60 respondents) | Source: BinanceResearch

Binance foresaw that changes in local and global regulations would top the growth driver list, with 44.3% of the respondents selecting it.

“Once again, this rate remained in line with our past survey: in both June and October 2019.”

Traditional brokerages offering crypto-services are considered one of the potential growth drivers for this industry, rank #2 in the list. New products such as the development of options contracts and other derivatives (e.g., Binance Futures’ perpetual contract) rank as high as Bitcoin ETFs for growth drivers. Digital currency initiatives by central banks and Libra also ranked relatively high, with 19,7% rate.

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