1. Exchanges: Cryptocurrency traders can reduce their exposure to Bitcoin by selling their Bitcoin for stablecoins. This allows traders to keep their wealth on an exchange without converting back into fiat.
This is useful for two reasons. First, many exchanges take days to convert fiat into crypto, which means investors must wait to trade. Second, converting back into fiat means a tax bill is coming soon, since most exchange on- and off-ramps now require KYC-AML.
2. Inflation hedge: People in countries with high inflation and hyperinflation can hold on to stablecoins in order to preserve their savings. Bitcoin is too volatile for most people in Venezuela. Instead, they would prefer to hold onto cryptocurrencies backed by gold or Swiss francs.
3. Interbank settlement: Interbank settlement is a trillion-US dollar industry, as discussed in the chapter on Ripple in the June 2019 edition of the Crypto Research Report published by Incrementum.
Instead of giving away billions in revenue to Ripple, companies such as J.P. Morgan are releasing their own centralized stablecoins backed by fiat in order to settle transactions globally on a permissioned blockchain instead of legacy banking software.
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