The "GPT Moment" of stablecoins: The widespread application of Blockchain in the financial and public sectors

1. Why is the large-scale adoption of Blockchain happening now?

The reason why 2025 may become the "ChatGPT moment" for the application of Blockchain in finance and the public sector:

• The supportive stance of US regulators towards Blockchain is expected to be a year that changes the landscape of the industry. This could lead to broader adoption of Blockchain-based coins and stimulate the emergence of additional use cases in the financial and other sectors in both the private and public sectors in the US.

• Another potential catalyst is the ongoing focus on the transparency and accountability of public spending.

These changes are built on developments over the past 12-15 months, including the EU's regulation of crypto assets market (MiCA), the growth in user demand reflected in cryptocurrency ETF issuance, the institutionalization of cryptocurrency trading and custody, as well as the US government's establishment of a strategic Bitcoin reserve.

Although banks, asset management companies, the public sector, and government agencies have increased their participation in Blockchain, they still lag behind some more optimistic expectations. The reality is that digital finance already exists in both consumer and institutional finance areas, including internet banking, which are built on proprietary databases and centralized systems. We are now witnessing the accelerated integration of internet-native technologies, currencies, and Blockchain and digital-native use cases.

The government's adoption of Blockchain is divided into two categories: empowering new financial instruments and system modernization. The system is upgraded by integrating shared ledgers to enhance data synchronization, transparency, and efficiency.

Stablecoins are currently the main holders of US Treasury bonds and have begun to influence global financial flows. The growing popularity of stablecoins reflects the sustained demand for dollar-denominated assets.

1.1 Stablecoin is rising

Stablecoins are cryptocurrencies that are pegged to stable assets such as the US dollar (, and the main catalyst for their broader acceptance may be clarity in US regulation. This can allow stablecoins and Blockchain ) to better integrate into the existing financial system from a broader perspective.

Given the dominant position of the US dollar in international finance, changes in the stablecoin landscape in the United States will impact the broader global system.

The U.S. government seems eager to promote the development of the onshore digital asset industry, which is one of its key focuses for enhancing innovation and efficiency. In January 2025, an executive order by the U.S. President titled "Strengthening America's Leadership in Digital Financial Technology" established a digital asset working group responsible for developing a federal regulatory framework for the industry.

In a regulatory-friendly environment, digital assets are increasingly merging with existing financial institutions, laying the foundation for the growth of stablecoin usage. Macroeconomic factors such as the demand for the US dollar in emerging and frontier markets further support this trend.

According to DefiLlama data, as of the end of March 2025, the total value of stablecoins exceeded $230 billion, which is 30 times that of five years ago. This somewhat reflects the growth of the total value of cryptocurrencies, which increased by 1400% over the five years leading up to the end of March 2025, as well as the growth in institutional demand. Our analysis indicates that under the baseline scenario, the total supply of stablecoins could reach $1.6 trillion, with bear and bull market scenarios reaching approximately $0.5 trillion to $3.7 trillion, respectively.

U.S. Treasury Demand: Establishing a regulatory framework for U.S. stablecoins will support the demand for risk-free U.S. dollar assets both domestically and internationally. Stablecoin issuers must purchase U.S. Treasuries or similar low-risk assets as a measure of their possession of secure underlying collateral. In the baseline scenario, we expect the amount of U.S. Treasuries purchased to exceed $1 trillion. By 2030, the amount of U.S. Treasuries held by stablecoin issuers could surpass the total amount in any current jurisdiction.

( 1.2 Future Challenges

The development of stablecoins also faces resistance and challenges. Although the dominance of the US dollar may evolve over time, the euro or other currencies may be driven by regulations in various countries, many non-US policymakers may see stablecoins as a tool of dollar hegemony.

The geopolitical situation remains turbulent. If the world continues to move towards a multipolar system, policymakers in China and Europe are likely to be keen on promoting central bank digital currencies ) CBDC ( or stablecoins issued in their local currencies. Policymakers in emerging markets and frontier markets will also remain vigilant about the local risks posed by dollarization.

Stablecoins and central bank digital currencies ) CBDC ### are both attempts to create digital currencies, but they differ in terms of technical architecture and governance. The issuer of CBDC is the central bank, while private entities can issue stablecoins. CBDCs are often inspired by the principles of Blockchain but are not based on public chains. Given the demand for the dollar in wholesale and financial transactions, especially in jurisdictions with high currency volatility, stablecoins may play the role of Eurodollar 2.0.

Therefore, we expect that the stablecoin market will remain dominated by the US dollar in the coming years. In the baseline scenario, we expect that by 2030, approximately 90% of the stablecoin supply will be denominated in US dollars, although this is a decrease from the current nearly 100%.

Stablecoins are at risk of a bank run and may trigger a contagion effect. In 2023, stablecoins decoupled approximately 1,900 times, with about 600 instances involving large stablecoins. Large-scale decoupling events could suppress liquidity in the crypto market, trigger automatic liquidations, weaken the redemption capabilities of trading platforms, and potentially have broader contagion effects on the financial system. For example, in March 2023, the news of the collapse of Silicon Valley Bank triggered a massive redemption of USDC.

A recent report by Galaxy Digital pointed out that Tether provided approximately $8 billion in funding, accounting for about 25% of the total amount in the crypto lending business, and noted that if Tether issues these loans using depositors' funds, "it would violate certain banking regulations and face serious systemic risks."

( Does the public sector need Blockchain?

Trust and transparency are essential for maintaining public support for governments and institutions.

Blockchain introduces a trust-based decentralized public sector data management approach. In traditional systems, trust comes from authoritative institutions—such as the government validating its own records—while blockchain allows for cryptographic proof of authenticity. Trust is rooted in the technology itself.

The immutability of the Blockchain ensures that information, once recorded, cannot be changed, thus providing tamper-proof records for sensitive public data ) such as land registration, voting systems, and financial transactions (. Although other technologies can also achieve immutability, they often require a trusted party to implement.

Cross-border activities, especially those involving the payment of international funds through institutions like the World Bank or humanitarian aid programs, represent an important use case for Blockchain. The flow of international funds can be opaque, making it difficult to effectively verify whether resources reach the intended recipients. Blockchain can provide transparency for complex transactions, even in remote or unstable areas where financial institutions are not functioning well.

2. The GPT Moment of Stablecoins

) 2.1 How do stablecoins work?

Stablecoins are a type of cryptocurrency designed to stabilize their value by pegging their market value to underlying assets. The underlying assets can be fiat currencies such as the US dollar ###, commodities such as gold (, or a basket of financial instruments.

Key components of the stablecoin ecosystem include:

• Stablecoin Issuer: An entity that issues stablecoins and is responsible for managing its underlying assets, typically holding a value equivalent to the circulating supply of the stablecoin in the underlying assets.

• Blockchain ledger: After the stablecoin is issued to the public, transactions will be recorded on the blockchain ledger. This ledger provides transparency and security by tracking the ownership and flow of the stablecoin among users.

• Reserves and Collateral: Reserves ensure that each token can be redeemed at its pegged value. For fiat-collateralized stablecoins, these reserves typically include cash, short-term government bonds, and other liquid assets.

• Digital wallet providers: provide digital wallets, which can be mobile applications, hardware devices, or software interfaces, allowing stablecoin holders to store, send, and receive their currency.

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How do stablecoins maintain their pegged exchange rate?

Stablecoins rely on different mechanisms to ensure their value remains consistent with the underlying assets. Fiat-backed stablecoins maintain their pegged rate by ensuring that each issued token can be redeemed for an equivalent amount of fiat currency.

The largest stablecoin by market capitalization, USDT, was launched in 2014 on the Bitcoin Blockchain and expanded to the Ethereum Blockchain in 2017, thus enabling its application in decentralized finance ( DeFi ). In 2019, due to faster speeds and lower costs, USDT further expanded to the Tron network, which is widely used in Asia. USDT mainly operates overseas, but times are changing.

( 2.2 Factors Driving the Adoption of Stablecoins

According to Erin McCune, Founder & Principal Consultant, Forte FinTech, the channel factors of stablecoin are as follows:

• The practical advantages of stablecoins ) include fast speed, low cost, and availability around the clock ( creating demand in developed and emerging economies. Especially in countries where instant payments have not yet become widespread, small and medium-sized enterprises ) SMB ( are not adequately served by existing businesses, while multinational companies wish to facilitate global fund transfers more easily. The costs of cross-border transactions in these countries remain high, with banking technology being underdeveloped and/or financial inclusion lagging.

• Macro demand ) inflation hedging, financial inclusion ### is driving the adoption of stablecoins in regions with severe inflation. Consumers in countries such as Argentina, Turkey, Nigeria, Kenya, and Venezuela are using stablecoins to protect their funds. Today, an increasing amount of remittances is being received in the form of stablecoins, and consumers without bank accounts can now use digital dollars.

• The recognition and integration of existing banks and payment providers are key to the legalization of stablecoins (, especially for institutional and enterprise users ), and can rapidly expand their usage and applicability. Mature and scaled payment network operators and core processors can enhance transparency and facilitate the integration of digital solutions relied upon by businesses and merchants. The clearing mechanisms between various stablecoins among banks and non-bank institutions are also crucial for achieving scalability. Consumer-facing ( easy-to-use wallets ) and merchants ( are embedding the acceptance of stablecoins into technology improvements of acquiring platforms accessible via API ), which are eliminating the barriers that once confined stablecoins to the fringes of cryptocurrency.

• The long-awaited regulatory clarity will allow banks and the broader financial services industry to introduce stablecoins in both retail and wholesale sectors. Transparency ( audit requirements ) and consistent liquidity management ( reliable face value ) will also simplify operational integration.

( 2.3 The Potential Market for stablecoins

We have built a forecast range based on the growth of stablecoin demand driven by the following factors:

• Convert part of the US dollar holdings both domestically and internationally from cash to stablecoin - US cash held overseas is often a hedging tool against local volatility, while stablecoin offers a more convenient way to obtain such hedges. In the US, stablecoin can be partially used for certain payment functions and held for this purpose.

• Reconfigure some of the short-term liquidity held by American and international households and businesses in dollars into stablecoins to support cash management and payment operations. Because stablecoins are easy to use ), for example, for round-the-clock cross-border payments (, and if regulations permit, stablecoins may partially replace earnings.