The European Central Bank published a report on stablecoins. The regulator proposed its own classification of stablecoins and provided analytical market data.

Currently, at least 54 stablecoins exist on the cryptocurrency market, with 24 of them being active and operational. The total market capitalization of active stablecoin projects almost tripled from January 2018 to July 2019, from 1.5 billion euros to more than 4.3 billion euros. The average monthly volume of transactions with stablecoins for the same period amounted to 13.5 billion euros.

The ECB classified stablecoins into four categories, depending on how their value is supported:

  • tokenized funds (secured by deposits),
  • off-chain collateralised stablecoins backed by assets outside the blockchain (traditional classes of assets that are held by the issuer until the user requests their redemption),
  • on-chain collateralised stablecoins backed by assets on the blockchain (crypto assets that can be stored in a decentralized way),
  • algorithmic stablecoins (supported solely by user expectations over its future purchasing power).

The largest market share is occupied by tokenized funds, which are often called fiat-based stablecoins. They account for 97% of the stablecoin market. And the most popular coin among this class of stablecoins is Tether. As of July 2019, it accounted for 81% of the total stablecoin market capitalization. It is worth noting that the stablecoin market is becoming increasingly competitive. The share of Tether fell to 81% in July 2019 from 99% in February 2018.

Currently, Tether's capitalization is 3.5 billion euros, and the average daily volume is 12.7 billion euros.

“These absolute figures should, however, be taken with a pinch of salt as recent research insights point towards a substantial number of exchange platforms engaging in wash trading (i.e. market manipulation in which an investor simultaneously sells and buys), thus artificially increasing the volumes of traded crypto-assets.”

Most often stablecoins are tied to deposits in US dollars (20%), commodities (15%), or euro (9%).

According to the ECB, stablecoins in their current form, with the dominance of tokenized funds,  follow the business model of traditional electronic money and prepaid payment systems. Although they use distributed ledger technology, they are subject to the same risks as their traditional competitors.