tl;dr
The role of stablecoins is expanding beyond the crypto market and attracting attention from traditional financial institutions. New regulations from Europe and the US could make stablecoins more useful in the real world, but also pose challenges for issuers like Tether and Circle. Tether’s USDT and ...
Stablecoins are attracting traditional financial institutions and facing regulatory challenges. Experts are questioning the sustainability of Tether and Circle under new regulations. Legal and centralization risks are posing challenges for the stablecoin market. Traditional finance firms are planning to enter the stablecoin market due to its expanding role. Despite the high transaction value, the volume of stablecoin transactions remains relatively low, prompting major banks and investment giants to consider launching their own stablecoins. PayPal has already introduced PYUSD, and Visa is developing a platform to help banks issue stablecoins. In response to growing demand, traditional financial institutions are developing their own stablecoins, with major banks and investment giants considering launching their own stablecoins. Additionally, Visa is developing a platform to help banks issue stablecoins, and Bank of America has committed to launching a stablecoin if new US regulations permit.
Regulations from Europe and the US could make stablecoins more useful in the real world but also pose challenges for issuers like Tether and Circle. Tether’s USDT and Circle’s USDC currently dominate the stablecoin market, but experts believe this could change. The top 10 stablecoins have a total market capitalization of approximately $220 billion, with fiat-backed stablecoins making up around 95% of the total supply. However, there are concerns about centralization and legal risks. The US is expected to introduce stablecoin-specific legislation next year, while the EU’s MiCA regulations require stablecoins to meet banking-like standards. Traditional financial institutions are planning to enter the stablecoin market, with major banks and investment giants considering launching their own stablecoins. Additionally, Visa is developing a platform to help banks issue stablecoins, and Bank of America has committed to launching a stablecoin if new US regulations permit.
A recent report revealed that the top 10 stablecoins have a total market capitalization of approximately $220 billion, with Tether alone accounting for about 65% of this total, while USDC holds another 25%. The report also highlighted that fiat-backed stablecoins are the most common, making up approximately 95% of the total supply. However, concerns about centralization and legal risks have been raised, with US regulators drafting specific rules for stablecoins and bills, including FIT21, GENIUS, and STABLE, currently under discussion. The US is expected to introduce stablecoin-specific legislation next year. The EU’s MiCA regulations require stablecoins to meet banking-like standards. In response, Tether has opted out of the European market to avoid MiCA compliance.
A report from Ark Invest stated that in 2024, the total annual transaction volume of stablecoins reached $15.6 trillion—equivalent to 119% of Visa’s volume and 200% of Mastercard’s. Despite this, the number of stablecoin transactions remains relatively low at 110 million per month, only 0.41% of Visa’s and 0.72% of Mastercard’s. This suggests that the average stablecoin transaction value is significantly higher than those of Visa and Mastercard. Due to this growing demand, traditional financial institutions are racing to develop their own stablecoins. Major banks like BBVA and Standard Chartered are considering launching their own stablecoins. PayPal has already introduced PYUSD, while Visa is developing the Visa Tokenized Asset Platform (VTAP) to help banks issue stablecoins. Notably, Bank of America (BoA) recently committed to launching a stablecoin if new US regulations permit. Meanwhile, investment giants such as BlackRock, Franklin Templeton, and Fidelity are offering tokenized money market funds, which function similarly to stablecoins and could directly compete with USDC and USDT.