Wealth managers and institutional investors are anticipating strong growth in the stablecoin sector, predicting that market capitalisation and their use in transactions will “surge”, according to research from CrossLedger Capital.

Its study of global wealth managers, family offices, hedge funds, insurance asset managers, and pension funds found that 85 per cent expected market cap of stablecoins to exceed $3trn within five years, up from $200bn at the end of last year.

At the end of last year, more than $27trn of transactions were processed through stablecoins, a three-fold increase compared to the previous year.

More than three quarters (78 per cent) of respondents believed that this figure would hit $100trn within two years, while 49 per cent expected the $50trn milestone to be hit this year.

The study showed that investors expected rapid growth in the use of stablecoins across a suite of functions, with transactions and access to DeFI seen as the top benefits.

Almost all (98 per cent) respondents agreed that stablecoins would be a foundational element of DeFI, providing the stability and liquidity it needs to thrive.

However, investors also identified risks when investing in stablecoins, with their dependence on reserves, whether that’s previous metals or currencies, seen as the biggest risk.

This was followed by regulatory uncertainty and instability in the US dollar, as most stablecoins are linked to it.

Commenting on the findings, Brava CEO and founder, Graham Cooke, said: “Institutional investors and wealth managers worldwide are well aware of the stablecoin growth story and expect it to accelerate in the near term with market capitalisation and value of transactions expanding rapidly.

“Institutions are focused on the wider usage of stablecoins as engagement with the sector increases as underlined by how they see the market developing and their awareness of the risks of investing.”

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