1. Introduction: The Fiat Currency Proxy in the Digital World
Stablecoins are an extension of the credit of legal tender in the digital space, pegged 1:1 to specific fiat currencies (mainly the U.S. dollar), becoming a key bridge connecting traditional finance (TradFi) and the digital asset world. Its core value lies in marrying the trust system of fiat currency to an efficient, round-the-clock, borderless blockchain network, serving not only as the underlying payment infrastructure of the digital economy but also as a strategic hub for countries vying for future digital financial discourse power.
2. Market Landscape and Dynamics (as of 2024-2025)
The stablecoin market has reached a trillion-dollar trading scale, exhibiting a dual oligopoly structure, with structural changes occurring alongside the trend of compliance.
Market Size: As of mid-2025, the total market capitalization of global stablecoins has surpassed $250 billion. In 2024, its on-chain transaction volume reached $28 trillion, exceeding the combined total of Visa and Mastercard, highlighting its immense potential as a payment tool.
Major Participants: The market is highly concentrated, with USDT and USDC together accounting for nearly 90% of the share.
Key Dynamics: Since 2024, driven by regulatory expectations, the market share of compliant stablecoins represented by USDC has been steadily increasing. Meanwhile, traditional payment giants like PayPal and Stripe entering the market indicate that competition will extend from the crypto-native domain to mainstream finance.
3. Core Investment Logic: The Cornerstone of Digital Finance
The investment value of stablecoins is not based on price speculation but on their core functions as infrastructure.
An Efficient Global Payment Network: Stablecoins provide near-real-time, low-cost, and round-the-clock cross-border payment settlement, effectively addressing the high costs and low efficiency of traditional wire transfer systems (such as SWIFT), particularly suitable for high-inflation countries and cross-border trade scenarios.
A Fusion of TradFi and DeFi: Stablecoin issuers hold over $160 billion in U.S. Treasury bonds as reserves, becoming significant buyers in the treasury market, physically linking the digital asset market with traditional currency markets. Additionally, it serves as a core medium for the tokenization of real-world assets (RWA).
Hard Currency of the DeFi Ecosystem: In decentralized finance (DeFi), stablecoins are the primary unit of account and settlement for all activities such as lending, trading, and derivatives, serving as the 'blood' that sustains the entire ecosystem.
4. Global Regulatory Landscape: From 'Wild' to 'Compliance'
2024-2025 will be a milestone year for global stablecoin regulation, with major economies establishing regulatory frameworks, with the core trends being clarification and licensing.
United States: Through the (GENIUS Act), a federal-level regulatory framework for payment-type stablecoins has been established, requiring 100% high-quality liquid asset reserves (cash, short-term U.S. Treasury bonds) and regulating the issuing entities.
European Union: The (Crypto Asset Market Regulation Act) (MiCA) is fully effective, imposing strict requirements on the capital, governance, and reserves of stablecoin issuers, paving the way for compliant operations of stablecoins within the EU.
Hong Kong: Enacted the (Stablecoin Ordinance) to implement a licensing system. Its regulatory framework has an open attitude towards the currency of reserve assets (such as RMB), aiming to create a globally leading hub for compliant stablecoins.
Long-term Impact: The clarification of regulations will accelerate the entry of traditional financial institutions, eliminate subpar projects, enhance the transparency and security of the entire industry, and lay the foundation for the scaled application of stablecoins.
5. Risks and Challenges
Regulatory Uncertainty: Although frameworks have been established, specific implementation details and cross-border regulatory coordination still present variables that may limit business development.
Depegging and Run Risks: The trust in stablecoins is rooted in their reserve assets. Any rumors regarding insufficient reserves or asset quality issues could trigger a crisis of confidence, leading to a 'death spiral' similar to Terra/UST.
Competition from CBDCs: Central Bank Digital Currencies (CBDCs), as the 'national team', have inherent advantages in terms of sovereign credit, compliance, and promotional efforts, which will create a long-term competitive and complementary relationship with private stablecoins in the payments field.
6. Future Outlook and Conclusion
Stablecoins are an extension of fiat currency in the digital space, with their infrastructure status increasingly solidified. Looking ahead, two major trends are worth noting: first, the deepening of application scenarios, penetrating from crypto trading to broader areas like supply chain finance and corporate treasury management; second, the rise of multi-currency stablecoins, particularly offshore RMB stablecoins (CNH-Coin), which under a clear regulatory framework in Hong Kong, are expected to become an important digital tool to promote the internationalization of the RMB, leveraging the 'Belt and Road' initiative and cross-border trade demand.
Conclusion: Investing in the stablecoin sector is fundamentally about investing in the underlying 'financial highway' of the future digital economy. Its value does not lie in price fluctuations but in its network effects, transaction scale, and depth of integration with the real economy. As global regulatory frameworks are established, this sector is transitioning from a high-risk, wild growth phase to a compliance-driven period of robust expansion, possessing long-term strategic allocation value.
