The Stable Currency of the Encryption World: From Marginal to Mainstream

The encryption world has been expanding in scale over the past 5-10 years, but the essential application scenarios have not undergone significant changes. Aside from Bitcoin, stablecoins have become the most successful cryptocurrency application.

Bitcoin has gained global recognition with its astonishing price growth curve, becoming a representative of decentralized currency. From a practicality standpoint, stablecoins are the truly adopted encryption assets on a large scale worldwide.

The global stablecoin market capitalization has reached 243.8 billion USD. According to data platform statistics, the total trading volume of stablecoins in the past 12 months has reached 33.4 trillion USD, with the number of transactions reaching 5.8 billion, and the total number of unique active addresses reaching 250 million.

Although the application demand and logic of stablecoins have basically matured, their regulation is still in the adjustment stage. In recent years, global regulation of stablecoins has been continuously improved. The U.S. Senate recently passed the "Guiding and Promoting American Stablecoin Innovation Act," clearing obstacles for global stablecoin regulation once again.

The development of stablecoins is rapid, with significant head effects.

Stablecoins provide value stability by pegging to underlying assets such as fiat currencies and precious metals, aiming to eliminate the high volatility of cryptocurrencies and provide users with reliable settlement, value storage, and investment tools. As a measure of value in the crypto market, the expansion of stablecoins reflects the growth of the industry scale. In 2017, the total circulation of stablecoins worldwide was less than $1 billion, and today it is approaching $250 billion, while the global crypto market size has also grown from less than $1 trillion to $3 trillion.

This round of the bull market can be seen as a bull market for stablecoins. After the FTX incident, the global supply of stablecoins fell from $190 billion to $120 billion, but then steadily increased, continuing to rise over the course of 18 months. Meanwhile, the price of Bitcoin climbed from a low of $17,500 to over $100,000. This is mainly due to external institutions entering the market through stablecoins, leading to increased external liquidity and an expansion of the stablecoin scale.

Currently, there are various types of stablecoins that can be classified according to dimensions such as control center, fiat currency type, interest-bearing or not, collateral, etc. Unlike other encryption assets, stablecoins serve as core pricing tools, are not used for speculation, and are often not restricted by official institutions, allowing for global adoption, thereby laying the foundation for them to become a global currency.

The application range of stablecoins has expanded to mainstream regions such as Europe, America, Japan, and South Korea, as well as emerging markets like Brazil, India, Indonesia, Nigeria, and Turkey, especially popular in areas with weak financial infrastructure and serious inflation. According to a report by a certain payment platform, the most popular uses of stablecoins in non-encryption fields include currency substitution (69%), payment for goods and services (39%), and cross-border payments (39%).

Stablecoins are gradually shedding the label of being merely a cryptocurrency investment tool and are becoming an important link between the cryptocurrency market and the global economy. Currently, US dollar stablecoins account for 99% of the stablecoin market and are referred to as the "dollar branch." Due to the scale effect inherent in the currency itself, the stablecoin market exhibits significant characteristics of centralization.

Centralized stablecoins dominate the market, with one stablecoin's market capitalization reaching $152 billion, accounting for 62.29%; another major stablecoin has a market capitalization of about $60.3 billion, accounting for 24.71%. Together, these two stablecoins account for over 80% of the total market volume. In addition, there are some emerging semi-centralized and decentralized stablecoins that also occupy a certain market share. From the perspective of public chains, Ethereum has an absolute dominant position, with a market share of 50%, followed by Tron(31.36%), Solana(4.85%), and BSC(4.15%).

The profit from stablecoin issuance is considerable, with marginal costs approaching zero. A large stablecoin issuance institution recorded a net profit of up to $13.7 billion in 2024, and the group's net assets increased to $20 billion, with only 165 employees in the company. Such high returns have attracted numerous institutions to enter the market, including traditional financial institutions and internet companies.

Regulatory Adjustment Accelerates, U.S. Senate Passes the GENIUS Act

With the rapid development of the stablecoin market, regulation has followed suit. Currently, multiple regions around the world, including the United States, the European Union, Singapore, Dubai, and Hong Kong, have begun or have already improved their stablecoin regulatory frameworks.

As a cryptocurrency hub, the regulation of stablecoins in the United States has garnered significant attention. Before 2025, the U.S. Congress did not enact specific regulations regarding stablecoins and cryptocurrencies. Regulatory agencies such as the SEC, CFTC, and OCC have defined stablecoins in order to gain regulatory control over this emerging sector. In addition, the regulatory environment in various states also shows a trend of diversification.

Before 2025, the regulation of stablecoins in the United States was relatively fragmented, even resulting in chaos caused by the tug-of-war between regulatory agencies, bringing high uncertainty and compliance challenges to the industry. With the new government taking office, the regulation of stablecoins has been accelerated.

In February of this year, the U.S. House of Representatives and Senate respectively introduced the "Stablecoin Transparency and Accountability Promotion Act of 2025" (STABLE) and the "Guiding and Establishing the American Stablecoin National Innovation Act" (GENIUS). The introduction of these two bills has received high-level support.

Although both bills target stablecoin regulation, their focuses are slightly different. The STABLE Act emphasizes federal uniform control, while the GENIUS Act tends to build a dual regulatory system that operates in parallel at the state and federal levels. There are also differences between the two in terms of issuance qualifications, reserve requirements, and algorithmic stablecoin management.

Currently, the GENIUS bill is progressing more rapidly. After multiple rounds of amendments and voting, the bill was ultimately passed on the evening of May 19 with a vote result of 66 in favor and 32 against, clearing the procedural hurdles for the final legislation. The next step will enter the Senate floor debate and amendment process, followed by consideration by the House of Representatives. Considering the lower threshold for passage in the House, the bill is expected to be submitted to the President's office for signing into formal law.

The passage of the GENIUS Act will fill the regulatory gap for stablecoins in the United States, clarifying the regulatory subjects and rules, further promoting the development of the U.S. stablecoin industry, and contributing to the mainstreaming of the encryption industry. At the same time, this will strengthen the influence of the U.S. dollar in the crypto market, providing impetus for the U.S. to build a centralized and decentralized currency hegemony. It is worth noting that the new act requires stablecoin holders to hold U.S. Treasury bonds, dollars, etc., which will create new and sustained purchasing demand for U.S. Treasuries.

Outside the United States, global stablecoin regulation has begun to take shape.

In fact, before the United States, the European Union introduced the Markets in Crypto-Assets (MiCA) regulation, providing a comprehensive regulatory framework for all crypto assets, including stablecoins. MiCA categorizes stablecoins into asset-referenced tokens and electronic money tokens, also prohibiting algorithmic stablecoins, requiring issuers to maintain a 1:1 capital reserve, comply with transparency rules, and register with EU regulatory authorities.

Hong Kong is also a leader in stablecoin regulation. In December 2024, the Hong Kong government submitted the "Stablecoin Regulation Draft", which is expected to resume its second reading debate at the Legislative Council meeting on May 21. Hong Kong adopts a prudent and inclusive approach to stablecoin legislation, also implementing a licensing system for management, with clear regulations on issuer establishment, capital requirements, reserve assets, and other aspects.

In addition, places like Singapore and Dubai have also engaged in stablecoin regulation. Overall, there are limited differences in global stablecoin regulation, which focuses on licensing to regulate issuers and sets clear provisions for reserve issuance, risk isolation, anti-money laundering, and anti-terrorism. The differences mainly lie in the categories of stablecoins allowed, restrictions on issuers, and localized anti-money laundering compliance.

Major regions around the world are successively launching regulations for stablecoins, reflecting that the role of stablecoins in the global financial market is shifting from being overlooked to a competitive landscape. Stablecoins are gradually becoming an important component of the global currency market, not only enhancing the voice of the encryption market but also adding significant weight to killer applications in the encryption field. On the other hand, developing countries are using stablecoins for around-the-clock global settlements, achieving the vision of decentralized electronic cash to some extent.

In the development process of the encryption industry, many claimed value applications may be eliminated. However, at least stablecoins and Bitcoin still have significance and value.