Less than 1% of stablecoins are used for payments, and about one-fifth aren’t being used at all, a Kansas City Fed researcher estimated, indicating a significant gap between the perceived potential of these digital assets and their current transactional utility, despite legislative efforts to foster their adoption. The findings, published on April 15, 2026, by Payments Dive, suggest that while the stablecoin market is growing, its primary function remains rooted in trading and speculative activities rather than everyday commerce.
The Current Landscape of Stablecoin Utilization
A recent analysis conducted by a researcher at the Federal Reserve Bank of Kansas City has shed critical light on the actual usage patterns of stablecoins, revealing a stark contrast to the widespread predictions of their imminent dominance in payment systems. The report, which draws on data from crypto research firm DeFiLlama, indicates that a mere fraction of the circulating stablecoin supply is currently engaged in transactional activities. Specifically, less than 1% of stablecoins are estimated to be utilized for payments in the traditional sense, encompassing business-to-business (B2B), person-to-person (P2P), and consumer-merchant transactions.
The research further highlights that a substantial portion of stablecoins, approximately one-fifth (21.2%), are effectively dormant, sitting idle and not participating in any discernible economic activity. The remaining stablecoin supply is primarily allocated to trading-related purposes, accounting for roughly half of the total, and another significant portion, nearly one-third, is channeled into non-payment fund transfers.
The Kansas City Fed’s assessment relies on data encompassing the four largest stablecoins by circulation: USDT (Tether), USDC (Circle), USDE (Ethena), and USDS (Sky Dollar). These four collectively represent about 90% of the entire stablecoin market, making them a robust proxy for understanding broader trends.
The Impact of the Genius Act and Evolving Use Cases
The findings emerge less than a year after President Donald Trump signed the "Genius Act" into law in July 2025. This landmark legislation aimed to establish a regulatory framework for stablecoins, with the implicit goal of fostering their integration into the mainstream financial system, particularly for payment purposes. However, the Kansas City Fed report suggests that the promised "explosive growth" in payment adoption has yet to materialize.
"Payments defined in the traditional sense of B2B, P2P, and so on, have yet to live up to the promise of explosive growth proclaimed by many since the passage of the GENIUS act in July 2025," the report stated. Despite this observation, the researcher acknowledged that "the use of stablecoins in payments is undoubtedly growing," albeit at a pace that appears slower than anticipated by many proponents.
This sentiment is echoed by industry insiders who, while recognizing the current limitations, are actively exploring and identifying novel use cases for stablecoins. During a webinar hosted by Flagship Advisory Partners and a podcast episode published by the Conference of State Bank Supervisors, payment industry professionals pointed to stablecoins’ potential in areas such as remittances, airline payments, and retail marketplace transactions. These emerging applications suggest a future where stablecoins could carve out significant niches beyond traditional retail payments.
Market Growth and Consumer Awareness: A Disconnect
The Kansas City Fed’s findings are situated within a broader context of a rapidly expanding stablecoin market. S&P Global Market Intelligence, for instance, reported that approximately $269 billion in stablecoins were in circulation in 2025. The firm projects substantial growth, with the stablecoin market expected to reach $434 billion by 2028. This significant market expansion, however, appears to be driven more by investment and speculative trading than by widespread payment adoption.
Adding another layer to this complex picture is the low level of consumer awareness. S&P Global Market Intelligence also indicated that only 12% of American consumers are aware of stablecoins. This low penetration rate among the general population further explains the limited uptake in everyday payment scenarios. For stablecoins to achieve mass adoption for payments, a significant increase in consumer understanding and trust will be necessary.
Broader Market Trends and International Expansion
Further underscoring the dynamic nature of the stablecoin landscape, a Macquarie report from March 2026 revealed a dramatic surge in the total value of stablecoin transactions. In February 2026, these transactions reached $1.78 trillion, a substantial increase from $668 billion a year prior. This surge is attributed, in part, to the increasing involvement of major payment players such as PayPal Holdings, Mastercard, and Fiserv, who are exploring and integrating digital assets into their offerings.
These payment giants are not limiting their stablecoin initiatives to domestic markets. PayPal, a prominent example, expanded its stablecoin offering to 68 countries in March 2026, including markets in Central and South America and Asia, such as Costa Rica, Honduras, Peru, Singapore, and Greenland. Previously, PayPal’s stablecoin was exclusively available to customers in the U.S. and the U.K. This international expansion signals a strategic effort to leverage stablecoins for cross-border transactions and to tap into global payment flows.
Challenges in Tracking and Varying Estimates
Despite the growing interest and investment in the stablecoin ecosystem, accurately tracking its various facets remains a significant challenge. The Kansas City Fed researcher acknowledged this difficulty, noting that it could explain why different estimates of the stablecoin industry often vary. The opacity of some blockchain transactions and the rapidly evolving nature of the digital asset space contribute to these estimation discrepancies.
The reliance on data from sources like DeFiLlama, while comprehensive, also presents its own set of considerations. The classification of stablecoin usage – distinguishing between trading, remittances, P2P transfers, and actual consumer payments – can be complex and subject to interpretation.
The Road Ahead: Bridging the Gap Between Potential and Practice
The findings from the Kansas City Fed researcher serve as a crucial reality check for the stablecoin industry. While the passage of the Genius Act represents a significant step towards regulatory clarity and has undoubtedly fueled market growth and exploration, the translation of this legislative momentum into widespread payment adoption is proving to be a more gradual process.
The low percentage of stablecoins used for payments, coupled with a substantial portion remaining idle, indicates that the current infrastructure, user experience, or perhaps the perceived value proposition for everyday transactions has not yet fully convinced a critical mass of users or businesses.
However, the ongoing innovation by payment giants, the exploration of niche use cases, and the increasing investment in the sector suggest that the potential for stablecoins in payments remains high. The challenge for the industry, regulators, and policymakers alike will be to effectively bridge the gap between the technological capabilities and regulatory frameworks of stablecoins and their practical, everyday utility for consumers and businesses worldwide. Future developments will likely focus on enhancing user experience, building trust, and demonstrating clear economic benefits that outweigh the perceived risks and complexities associated with these digital currencies. The next few years will be critical in determining whether stablecoins can transition from speculative assets and trading instruments to a truly integrated component of the global payment infrastructure.
