Analysis of the evolution, current landscape, and future prospects of stablecoins

Stablecoins, as an important innovation in the Crypto Assets sector, have gradually evolved from a marginal tool for digital asset trading to a bridge connecting TradFi and the crypto economy. The development of stablecoins is a condensed history of financial innovation, documenting the ongoing exploration within the Crypto Assets field to address the issue of price Fluctuation. Since their emergence in 2014, stablecoins have undergone multiple iterations and market tests, and their development trajectory reflects the entire process of the Crypto Assets industry moving from the margins to the mainstream. This evolutionary process can be clearly divided into four key stages, each with its unique development logic and market characteristics.

Origin and Evolution of Stablecoins

The initial exploration period ( 2014-2017 ) **: The concept of stablecoins was first proposed and practiced by Tether in 2014 ( originally as Realcoin ), launching the first stablecoin USDT pegged to the US dollar at a 1:1 ratio, aimed at providing a stable value measure and a hedging tool for the extremely volatile Bitcoin trading at that time.

The stablecoins in this phase mainly follow a simple fiat-collateral model, where an equivalent amount of US dollars needs to be deposited in the bank for each stablecoin issued. Due to the overall small scale of the Crypto Assets market, stablecoins did not attract widespread attention, and USDT's early market value was less than 7 million dollars. In 2015, BitUSD emerged as an early algorithmic stablecoin attempt, but it failed to gain widespread acceptance in the market.

This stage can be seen as the technological validation and market enlightenment period for stablecoins, where various stabilization mechanisms are in the preliminary testing phase, with few market users primarily due to the lack of a complete trust model. It wasn't until after 2017 that the overseas expansion of cryptocurrency exchanges made fiat transactions difficult. Therefore, exchanges adopted USDT stablecoin for deposit and withdrawal operations to comply with regulations, marking the beginning of the rapid expansion period for stablecoins.

Rapid Expansion Period (2018-2021: With the arrival of the cryptocurrency bull market in 2017, stablecoins entered a phase of rapid development. In 2018, Circle and Coinbase jointly launched the more transparent USDC, and the New York State Department of Financial Services approved the issuance of certain stablecoins, marking the beginning of regulatory attention to this field. This period is characterized by the diversification of collateral assets for fiat-backed stablecoins, expanding from the US dollar to currencies such as the euro and offshore Chinese yuan, while compliance requirements gradually increased, leading to a growing market interest in stablecoins.

The explosive growth of decentralized finance in 2020, ) DeFi (, created new application scenarios for stablecoins. As fundamental trading pairs and lending assets in the DeFi ecosystem, the demand for stablecoins surged. Data shows that the total market value of stablecoins rapidly increased from approximately $5 billion at the end of 2019 to $20 billion in 2020, achieving nearly threefold growth.

After Facebook attempted to launch the Libra) stablecoin, which was later renamed Diem(, the plan was unsuccessful, but it sparked widespread discussion and regulatory attention globally regarding the potential impact of stablecoins on the traditional currency system. During this process, stablecoins such as USDC and DAI developed rapidly, while USDT faced scrutiny over its auditing stability, affecting its market trust.

Risk Exposure and Adjustment Period )2022-2023: This phase is marked by a series of crisis events that exposed the vulnerabilities of the stablecoin ecosystem. In May 2022, the then third-largest algorithmic stablecoin TerraUSD ( UST ) collapsed due to design flaws and market panic, leading to a "death spiral" and ultimately decoupling, taking its sister token LUNA's value almost to zero, resulting in an evaporation of approximately $40 billion in market capitalization. This event triggered a chain reaction that led to a crash in the entire cryptocurrency market.

In March 2023, the bankruptcy of Silicon Valley Bank briefly caused USDC to decouple due to 8% of its reserves being held at that bank, leading to a market run and sell-off. These crises prompted the market to reassess the risk characteristics of different stablecoin models, particularly the structural weaknesses of algorithmic stablecoins.

Investors and regulators are placing greater emphasis on reserve transparency and asset security. The industry is entering a deep adjustment phase, with inferior projects being eliminated and high-quality projects strengthening risk management. Some stablecoins are starting to gain regulatory attention, with USDT leading the way, shifting their collateral to include U.S. Treasuries and a small amount of Crypto Assets as collateral. This has also allowed more institutions and teams to see the broad scenarios for stablecoins.

Standard Development Period (2024 to Present ): As the market gradually digests risk shocks, coupled with favorable factors such as the approval of the Bitcoin spot ETF in the United States, stablecoins have entered a relatively mature development stage.

In 2024, the trading volume of stablecoins reached approximately $37 trillion, surpassing the trading volume of Bitcoin at $19 trillion during the same period, indicating that its application has far exceeded the scope of Crypto Assets trading.

2025 will be a key year for stablecoin regulation, as the United States establishes a federal-level stablecoin regulatory framework through the GENIUS Act, and Hong Kong also issues the Stablecoin Ordinance to implement licensing management. In June of the same year, the second-largest stablecoin issuer, Circle, goes public in the United States, marking a further recognition of stablecoin companies by the mainstream financial system.

As of June 2025, the total market capitalization of global stablecoins has exceeded $250 billion, accounting for about 8% of the total market value of Crypto Assets, with the two major stablecoins, USDT and USDC, dominating the market, holding a combined market share of over 90%.

This evolutionary process shows that stablecoins have developed from a mere trading tool for Crypto Assets to a digital asset with broad payment, settlement, and investment functions. This evolution is driven by technological innovation and market demand, and is increasingly regulated and constrained by regulatory frameworks. The development trajectory of stablecoins also reflects the overall transformation of the Crypto Assets industry from disorderly growth to regulated development, from the margins to the mainstream.

Current Landscape and Regulatory Situation of the Stablecoin Market

After more than a decade of development and evolution, the stablecoin market has formed a relatively mature yet rapidly changing landscape. As of June 2025, the total market capitalization of global stablecoins has reached $251.1 billion, an increase of over $40 billion compared to the end of 2024, demonstrating strong market expansion momentum. This market size accounts for about 8% of the entire Crypto Assets sector, but its trading volume and actual application frequency far exceed those of other digital assets.

The current stablecoin ecosystem shows a high degree of centralization, with USDT( Tether) and USDC( USD Coin) dominating the market. USDT has a market cap of approximately $153.3 billion, while USDC has a market cap of around $61.4 billion, together accounting for over 85% of the total stablecoin market size. The formation of this "duopoly" pattern is the result of the combined effects of network effects, first-mover advantages, and differentiated market positioning.

As the longest-standing stablecoin, USDT occupies about 70% of the market share due to the channel advantages formed by its early entry into Crypto Assets exchanges. Its operating entity, Tether, adopts a relatively flexible reserve management strategy, with reserve assets including 81% in US dollars and cash equivalents like US Treasuries, 5% in Bitcoin, as well as other corporate bonds, secured loans, and precious metals. Although this diversified reserve structure brings higher returns, it has also raised market doubts due to transparency issues.

In contrast, USDC is jointly issued by Circle and Coinbase, marketed with high compliance and transparency. 80% of its reserve assets are allocated to U.S. Treasury bonds, and 20% are in cash deposits, all held in qualified institutions insured by the Federal Deposit Insurance Corporation (FDIC). This conservative and transparent asset management approach makes USDC more favored by institutional investors, especially after Circle becomes the first publicly listed stablecoin issuer in 2025, further solidifying its market position.

In addition, decentralized stablecoins are also an important entity in the development of blockchain, with DAI being a typical representative. DAI is generated on-chain through smart contracts by over-collateralizing Crypto Assets and is also known as the native stablecoin of the crypto world. Its related DeFi application scenarios are important supporters of on-chain activity.

The application scenarios of stablecoins have far exceeded the initial scope of Crypto Assets trading, forming a diversified and comprehensive usage pattern. In the field of Crypto Assets trading, over 90% of cryptocurrency transactions use stablecoins as a trading medium, providing users with a "safe haven" to avoid the price Fluctuation of Bitcoin and other Crypto Assets.

What is even more striking is that stablecoins have begun to penetrate the real economy, with commercial giants like Amazon and Walmart attempting to accept stablecoin payments, significantly reducing transaction costs by avoiding the 2%-3% fees associated with credit cards.

As the market scale of stablecoins expands, the global regulatory framework is becoming increasingly clear, but there are significant differences in the regulatory philosophy among different countries and regions. The "GENIUS Act" passed in the U.S. in 2025, (, officially titled "Guidance and Establishment of the National Innovation Act for U.S. Stablecoins" ), represents the first federal-level regulatory framework for stablecoins. This act requires stablecoins to be pegged to the U.S. dollar at a 1:1 ratio, with reserve assets being U.S. dollars or U.S. Treasury securities, and implements tiered regulation: issuers with over $10 billion will be directly regulated by the Federal Reserve, while the rest will be regulated by individual states.

The passage of the Genius Act is seen as the United States "initiating a new type of currency war against the backdrop of accelerating financial digitalization," aiming to extend the dollar's hegemony into the realm of Crypto Assets. Hong Kong, on the other hand, has adopted a different regulatory path from the United States, with the "Stablecoin Regulation" officially implemented in May 2025, which constructs a strict regulatory framework based on "rigid reserves + criminal accountability + cross-border jurisdiction." This requires stablecoin issuers to hold a license issued by the Monetary Authority, meet a capital requirement of 25 million HKD, and allows for multi-currency reserves, leaving space for the development of offshore Renminbi stablecoins. The EU's "Crypto Assets Market Regulation Bill" (MiCA) is relatively conservative, strictly controlling the circulation of non-euro stablecoins and prioritizing the protection of the euro's status.

The main challenges and risks faced by the current stablecoin market include decoupling risk, credit risk, and technological risk, among others. Decoupling risk refers to the possibility that a stablecoin may deviate from its pegged price under extreme market conditions, such as the collapse of UST in 2022 and the brief decoupling of USDC due to the bankruptcy of Silicon Valley Bank in 2023.

Credit risk arises from concerns about the issuer's credibility and the adequacy of reserves, especially as Tether has faced multiple questions regarding the transparency of its reserves. Technical risk mainly refers to vulnerabilities in smart contracts and the security issues of blockchain networks, such as the 2016 DAO incident that led to the theft of 60 million USD worth of Ethereum.

From a more macro perspective, the rapid development of stablecoins is having a multidimensional impact on the TradFi system. On one hand, stablecoins improve payment efficiency and reduce transaction costs; on the other hand, they also pose challenges to monetary sovereignty, financial stability, and the management of cross-border capital flows.

The Bank for International Settlements warns that stablecoins could undermine monetary sovereignty and trigger capital flight risks in emerging economies. Andrew Bailey, the Governor of the Bank of England, also pointed out that the rise of stablecoins could shake public trust in national fiat currencies.

Analysis of Types and Technical Architecture of Stablecoins

Stablecoins, as a complex financial instrument, have their stability mechanisms and underlying technology architecture directly affecting their risk characteristics and market performance. Based on different methods of value support, mainstream stablecoins can be divided into four basic types, each with its unique operating mechanisms, advantages, and limitations. An in-depth analysis of these stablecoin architectures can help in understanding the diversity of the current stablecoin market and the directions for future innovation.

Fiat-Collateralized Stablecoins: This is the currently dominant type of stablecoin in the market, accounting for over 90% of the total market value of stablecoins. Its design concept is relatively simple and direct: issued by centralized institutions, for every stablecoin issued, an equivalent amount of fiat currency must be deposited in a bank as reserve, maintaining a 1:1 pegging ratio. USDT and USDC are typical representatives of this type of stablecoin. If the issuer encounters financial problems or engages in illegal operations (such as misappropriating reserves), it can easily trigger a crisis of trust and a run on the stablecoin. USDT has been subject to regulatory investigations and market skepticism multiple times due to issues with reserve transparency, leading to short-term price fluctuations. Furthermore, this type of stablecoin still heavily relies on the traditional banking system for reserve custody, which poses shortcomings in terms of decentralization and censorship resistance. If regulators freeze the issuer's bank account, the exchange and redemption of the stablecoin may be hindered.

Cryptocurrency collateralized stablecoins: This type of stablecoin represents an innovative attempt in the decentralized finance ( DeFi ) space, aiming to achieve value stability without relying on the traditional banking system. DAI is the most successful example of such a stablecoin, issued by the MakerDAO protocol. Its operational mechanism is relatively complex: users deposit cryptocurrency assets such as Ethereum ( ETH ) into a smart contract as collateral, generating stablecoins based on a set over-collateralization rate ( usually above 150% ). When the price of the collateralized assets fluctuates, the smart contract dynamically adjusts the collateralization ratio; if the collateralization ratio falls below a threshold, the system will require users to add collateral or repay the stablecoins, otherwise the collateral will be automatically liquidated. This type of stablecoin is generally more complex than fiat-backed stablecoins, posing a higher understanding and usage barrier for ordinary users, and thus is less widely adopted than the latter.

Algorithmic stablecoins: This is a type of experimental stablecoin that does not rely on actual collateral assets and completely relies on algorithms to adjust the supply to maintain value stability. AMPL and the former TerraUSD(UST) belong to this category. Algorithmic stablecoins maintain price stability through preset economic incentive mechanisms: when the token price is higher than the pegged price, the algorithm issues more stablecoins to increase supply and bring the price down; when the token price is lower than the pegged price, the system repurchases or destroys part of the stablecoins to reduce supply and push the price up. The theoretical advantage of this design is high capital efficiency, requiring no large amounts of actual asset collateral, having greater decentralization potential, and freeing itself from reliance on centralized institutions and the TradFi system. However, algorithmic stablecoins exhibit extremely high risks in practice, and their stability is highly dependent on the market's confidence in the algorithmic design.

In May 2022, the then third-largest algorithm stablecoin TerraUSD(UST) failed due to the "death spiral" mechanism, leading to its decoupling from the US dollar and ultimately collapsing, triggering a market chain reaction. This event exposed the fundamental flaws of algorithm stablecoins: under market panic and speculative behavior, the algorithmic adjustment mechanism may malfunction and accelerate price declines, forming an irreversible vicious cycle. Due to this major failure, algorithm stablecoins currently hold a very small market share, and most investors are cautious towards them.

Commodity-backed stablecoins: This type of stablecoin maintains value stability by collateralizing physical commodities such as gold and silver, like Paxos Gold(PAXG), where each token corresponds to 1 troy ounce of London Good Delivery gold, stored in a professional vault, and users can redeem physical gold at any time. The advantage of this type of stablecoin lies in the intrinsic value support of the commodities, making it attractive to users with commodity investment needs or those who trust physical assets, and it can also help mitigate inflation to some extent. However, the storage and custody of commodities come with high costs, and there are risks associated with transportation, custody loss, and security.

The technical stack and underlying architecture of stablecoins directly impact their functional characteristics and application scenarios. Most mainstream stablecoins were initially built on the Ethereum blockchain, following the ERC-20 token standard, which allows them to be compatible with Ethereum's vast decentralized application ecosystem. With the development of blockchain technology, stablecoin issuers have adopted a multi-chain strategy, issuing their tokens on public chains with high throughput and low fees to reduce user transaction costs and improve speed.

This multi-chain architecture, while expanding the accessibility and use cases of stablecoins, also brings challenges in cross-chain security and consistency. Smart contracts are the technical core for the functionality of stablecoins, especially for collateralized and algorithmic stablecoins, where collateral management, interest rate adjustments, and stability mechanisms are all implemented through smart contract coding. Therefore, the security auditing of smart contracts becomes a key aspect of risk management for stablecoin projects, as any code vulnerabilities can lead to financial losses or system failures.

The management of reserve assets for stablecoins is a key aspect that ensures their credibility and stability, with different types of stablecoins adopting different strategies. Fiat-collateralized stablecoins typically invest their reserves in liquid assets such as short-term U.S. Treasury bonds and bank deposits to meet potential redemption demands. Circle, the issuer of USDC, disclosed that 80% of its reserve assets are short-term U.S. Treasury bonds and 20% are cash deposits, all held in banks insured by the FDIC. This conservative asset management strategy has enhanced market confidence in the stability of USDC.

The governance mechanisms of stablecoins vary, reflecting different decentralization philosophies. Fiat-collateralized stablecoins are usually fully managed by centralized entities, such as Tether controlling the issuance and redemption policies of USDT. Crypto asset-collateralized stablecoins like DAI adopt a decentralized autonomous organization (DAO) model, where users holding the governance token MKR can vote on important parameters such as stability fees and collateral ratios.

The interoperability of stablecoins is an important attribute for expanding their application range. Excellent stablecoin design needs to take into account compatibility with different blockchain networks, wallet applications, exchanges, and smart contract platforms. Cross-chain bridge technology allows stablecoins to circulate across multiple blockchains, such as USDT and USDC, which have been issued on more than a dozen blockchains, including Ethereum.

In-Depth Analysis of the Challenges and Risks Facing Stablecoins

Although stablecoins have developed rapidly and demonstrate great potential, they still face multiple challenges and risks as a financial innovation product. These risks not only threaten the security of investors' assets but may also impact the stability of the entire financial system. A deep understanding of these risk factors is of great significance for market participants to prudently assess the investment value of stablecoins and for regulatory agencies to formulate appropriate regulatory frameworks.

Decoupling Risk: This is the most direct and destructive risk faced by stablecoins, referring to the situation where the market price of a stablecoin diverges from the value of its pegged asset. History shows that even mainstream stablecoins can temporarily decouple under extreme market conditions. The collapse of the algorithmic stablecoin TerraUSD(UST) is the most severe decoupling event, where due to design flaws and market panic, UST fell from $1 to less than $0.01 within days, ultimately resulting in the evaporation of $40 billion in market value, as well as causing the bankruptcy of some investment institutions and affecting the bankruptcy of FTX.

Fiat-collateralized stablecoins are not completely immune either. In March 2023, USDC briefly fell to a low of $0.87 due to some reserves being held at the bankrupt Silicon Valley Bank. The mechanism of decoupling risk varies by stablecoin type: fiat-collateralized stablecoins mainly stem from insufficient reserves or obstacles in redemption channels; crypto-collateralized stablecoins mainly arise from severe fluctuations in collateral prices; algorithmic stablecoins are more often rooted in a "death spiral" caused by a collapse in market confidence. Once a severe decoupling occurs, not only do holders face asset losses, but it may also trigger a chain reaction that impacts the entire Crypto Assets market and even the TradFi system.

Credit Risk: The credit risk of stablecoins mainly refers to the possibility that the issuing institution fails to fulfill its redemption commitments. Fiat-collateralized stablecoins are highly dependent on the issuer's credibility and financial stability. If the issuer engages in financial fraud, misappropriates reserves, or goes bankrupt, it will severely impact the value of the stablecoin and user confidence. In 2019, the New York Attorney General's Office accused Tether of inflating reserves and misappropriating funds to cover an $850 million loss at the Bitfinex exchange. Although a settlement was eventually reached, such incidents have exacerbated market distrust towards centralized issuers.

Even the highly compliant USDC, issued by Circle, exposed vulnerabilities in third-party bank risk management during the 2023 Silicon Valley Bank incident. The terrifying aspect of credit risk lies in its concealment—before a crisis erupts, users often find it difficult to accurately assess the issuer's true reserve situation and risk management capabilities.

Regulatory Risks: Stablecoins face an evolving regulatory environment globally, with significant risks posed by policy differences and uncertainties across various jurisdictions. Uncertainties in regulatory policies may manifest in several ways: whether stablecoins are classified as securities and thus face stricter regulations; what capital adequacy and liquidity requirements issuers must meet; how to comply with anti-money laundering ( AML ) and counter-terrorism financing ( CFT ) regulations, among others.

Liquidity risk: Refers to the risk that stablecoin holders cannot exchange their stablecoins for the pegged asset or other desired assets as expected. Even issuers with sufficient assets may not be able to meet demands in a timely manner during concentrated redemptions if reserve management is poor, such as investing large amounts of funds into assets with low liquidity (. Liquidity risk often forms a vicious cycle with market risk—market declines trigger collateral liquidations or user redemptions, while large-scale liquidations or redemptions further exacerbate market declines.

Technical Risks: The technical architecture of stablecoins based on blockchain and smart contracts introduces new types of risks. Vulnerabilities in smart contracts are a widely recognized technical risk; during the 2016 DAO incident, vulnerabilities led to the theft of $60 million worth of Ethereum. The more complex the stablecoin system, the higher the risk of code vulnerabilities, especially in systems involving cross-chain bridges, complex collateral mechanisms, or algorithmic adjustments. Private key management is another technical risk point; if users lose their private keys or if the keys are stolen, the corresponding stablecoin assets will be irretrievable.

Systemic Risk: As the stablecoin market expands to 250 billion USD ), its potential systemic risks are increasingly drawing attention. Bank of England Governor Andrew Bailey warned that if a large stablecoin decouples, it would trigger a sell-off of the government bonds backing it, thereby impacting the government bond market, which is central to financial stability.

Currency Sovereignty Challenges: For emerging markets and developing countries, the widespread use of dollar stablecoins may lead to "informal dollarization", undermining domestic monetary policy and financial sovereignty. Data from the International Monetary Fund (IMF) shows that the penetration rate of stablecoins in countries like Argentina and Turkey has exceeded 30%. These countries experience significant currency exchange rate fluctuations, and many residents purchase stablecoins like USDT to hedge against inflation and currency depreciation. The Italian Finance Minister has also issued a warning that dollar-pegged stablecoins may "crowd out" the euro. This currency substitution effect may weaken the ability of central banks to regulate the economy through monetary policy and could accelerate capital flight during crises. A more profound impact is that the dominance of dollar stablecoins may further entrench dollar hegemony, with the two largest stablecoins by market capitalization, USDT and USDC, both pegged to the dollar.

In the face of these multidimensional risks, stablecoin market participants need to manage their risk exposure more prudently, and regulators also need to strengthen international cooperation to build effective risk monitoring and disposal mechanisms. Market education is equally important; investors need to fully recognize that stablecoins are not risk-free assets, and their complex risk characteristics may manifest in different forms under different market conditions. Only through joint efforts from multiple parties can the stablecoin ecosystem achieve a balance between innovation and stability, leverage its potential in enhancing financial efficiency, while controlling systemic risks.

The Future Prospects and Development Possibilities of Stablecoins

Stablecoins, as an important component of digital financial innovation, are attracting significant market attention regarding their future development paths. Based on the current technological evolution, regulatory dynamics, and market trends, several key development directions can be identified. These prospects not only pertain to structural changes within the Crypto Assets industry but will also profoundly impact the global payment system, currency competition landscape, and financial infrastructure development.

Improvement of regulatory frameworks and global coordination: The passage of stablecoin legislation in the United States and Hong Kong in 2025 marks the beginning of a systematic incorporation of stablecoins into regulatory frameworks in major global financial markets. In the coming years, more countries and regions are expected to follow suit in formulating dedicated stablecoin regulations, with regulatory focuses potentially including: quality and transparency requirements for reserve assets, capital adequacy and risk management standards for issuing institutions, consumer protection measures, and compliance with anti-money laundering and counter-terrorist financing regulations. However, differences in regulatory philosophies across jurisdictions may lead to regulatory arbitrage and cross-border coordination challenges. The U.S. "GENIUS Act" requires stablecoins to be 100% backed by U.S. dollar assets, effectively positioning stablecoins as extensions of dollar hegemony; Hong Kong's "Stablecoin Ordinance" allows for multi-currency reserves, leaving room for the development of offshore RMB stablecoins; the EU's MiCA proposal tends to protect the euro's status and restricts the circulation of non-euro stablecoins. In this context of regulatory fragmentation, international organizations may play a greater role in promoting the establishment of minimum standards and collaborative mechanisms for global stablecoin regulation, and Chinese scholars have also proposed emphasizing the principle of "homogeneous regulation for homogeneous entities" in global stablecoin regulation.

Technological Innovation: The technical architecture of future stablecoins is expected to achieve breakthroughs in multiple dimensions. Cross-chain interoperability will become a standard feature of mainstream stablecoins, allowing users to seamlessly transfer stablecoin assets across different blockchain networks. Privacy-enhancing technologies like zero-knowledge proofs may be introduced in stablecoin transactions to provide a higher level of trading privacy protection while meeting regulatory compliance requirements. The programmability of smart contracts will further enrich the functionality of stablecoins, such as automatically executing complex financial transactions or embedding compliance rules. Reserve management technology will also advance, achieving real-time audits and transparent monitoring through blockchain to address the current transparency disputes regarding reserves. Notably, the interoperability innovations between central bank digital currencies (CBDC) and stablecoins are being explored. The "Cross-border Payment Link" system established through cooperation between the People's Bank of China and the Hong Kong Monetary Authority connects the fast payment systems of the two regions, supporting real-time exchange and clearing of Renminbi and Hong Kong dollars, laying the groundwork for the future collaboration of digital Renminbi and stablecoins.

Expansion and Deepening of Application Scenarios: Stablecoins will penetrate broader financial and commercial fields from their current main uses in Crypto Assets trading and cross-border payments. In the retail payment sector, the trend of commercial giants like Amazon and Walmart accepting stablecoin payments may accelerate, significantly reducing transaction costs by avoiding credit card fees of 2%-3%. In the B2B sector, stablecoins will be more widely used in supply chain finance and international trade settlement, addressing the issues of low efficiency and high costs associated with traditional wire transfers. In the decentralized finance ( DeFi ) space, stablecoins will continue to serve as fundamental trading pairs and lending assets, while more complex financial derivatives may be developed based on stablecoins. The tokenization of real-world assets ( RWA ) is another important direction, where traditional financial assets like U.S. Treasury bonds and corporate bonds are represented and traded on the blockchain in the form of stablecoins. In the new digital environment, the metaverse and gaming ecosystems may widely adopt stablecoins as the settlement tool for their built-in economic systems.

The evolution of market structure and the reshaping of competitive landscape: the current duopoly market structure of USDT and USDC may face challenges, as the entry of traditional financial institutions and tech giants will intensify industry competition. The Wall Street Journal reported that several large American banks and the payment platform Zelle are in talks to issue a joint stablecoin, and retailers including Uber are also continuing to explore launching their own stablecoins. In the future, three issuance models may coexist: stablecoins issued by professional Crypto Assets companies ( such as Tether and Circle ); stablecoins issued by traditional financial institutions ( such as banks and asset management companies ); and ecosystem stablecoins issued by tech platforms and large enterprises. This competition will drive the differentiated development of stablecoin products, forming a diverse supply pattern in terms of compliance, functional features, user experience, and more. An important observation point in market evolution is whether the dominant position of the US dollar stablecoin can be sustained, and whether other currency stablecoins, such as offshore RMB, will gain greater market share. Hong Kong is actively promoting itself as a "compliance stablecoin issuance center"; JD Coin Chain Technology, Yuan Coin Technology, and Standard Chartered Bank ( in Hong Kong ) have entered the Hong Kong Monetary Authority's stablecoin issuer sandbox, and these institutions may become important issuers of non-US dollar stablecoins.

Potential Impact on the Global Monetary System and Financial Architecture: The rise of stablecoins is changing the game rules of traditional international currency competition. On one hand, the dominance of the US dollar stablecoin may continue or even strengthen the dollar hegemony. The US "GENIUS Act" effectively treats stablecoins as a tool to alleviate the US debt crisis, mandating that stablecoins be pegged to the dollar, while US Treasuries can attract market purchases to ease the US government's debt crisis.

Integration and Conflict with the Traditional Financial System: Stablecoins pose a challenge to traditional banking operations while also creating new opportunities for collaboration. In terms of challenges, stablecoins divert bank payment and settlement business, which may lead to a reduction in banks' fee income; at the same time, stablecoin reserves are invested in assets such as U.S. Treasuries, indirectly squeezing the scale of funds available for banks to lend.

The development of stablecoins in emerging markets and developing countries: In these regions, due to significant currency Fluctuation and inadequate financial infrastructure, stablecoins may play a more important role, but they also bring greater risks. In Southeast Asia, Africa, and other areas, small and medium-sized enterprises have commonly used USD stablecoins for cross-border remittances, bypassing banks and the SWIFT system. The International Monetary Fund and central banks of various countries need to strengthen policy coordination to leverage the advantages of stablecoins in enhancing financial inclusion and reducing remittance costs while preventing their impact on macroeconomic stability and financial security.

Stablecoins serve as a bridge connecting TradFi and the crypto economy, and their future development will be influenced by multiple factors including technological innovation, market demand, regulatory policies, and geopolitical considerations. In an optimistic scenario, with appropriate regulatory frameworks and market self-discipline, stablecoins could evolve into an important component of digital financial infrastructure, improving payment efficiency, reducing transaction costs, and enhancing financial inclusion. In a pessimistic scenario, if risk management fails or regulation excessively stifles innovation, stablecoins may also become a new source of financial instability or fall into a state of stagnation. In any case, the reflections on the nature of currency, financial architecture, and cross-border capital flows that stablecoins have already sparked will continue to profoundly impact the evolution direction of the global financial system.