On one side, Argentinians rely on it to resist 200% inflation; on the other side, novice investors are left with nothing after being tricked by the hype of 'high-yield stability.' I have been in this industry for eight years and have witnessed stablecoins transform from a payment tool into the most dangerous financial game in the world.
As an old investor, I still remember the scene when I first bought USDT in 2017: at that time, stablecoins were just a simple payment tool. Who would have thought that eight years later, it has become the most magical existence in the global financial system.
Walking on the streets of Buenos Aires, you will find that the locals' first thing after receiving their salaries in pesos is to open their wallets and exchange them for USDT. In a country where the annual inflation rate exceeds 200%, stablecoins are not an investment choice but a necessity for survival.
Similarly, in Lagos, Nigeria, importers can complete cross-border payments in minutes with just a few taps on their phones, something that used to take weeks through banks. In 2024, the transaction volume of this type of on-chain transaction soared to $27 trillion, surpassing the total of Visa and Mastercard, becoming the 'invisible veins' of global finance.
But the bloody truth behind it is: in 2025, a certain algorithmic stablecoin, claiming to be 'pegged to $1', fell from $1 to $0.24 within 24 hours, and a certain yield-type stablecoin project lost $93 million, leaving countless people bankrupt.
01 The dual life of stablecoins: a lifeline and a tool for harvesting.
The most magical aspect of stablecoins in 2025 is that they are both a 'lifeline for the poor' and a 'tool for speculators to harvest'. This split stems from their ability to meet completely different levels of demand.
In developing countries, stablecoins solve real survival problems. Argentina's annual inflation rate exceeds 200%, and after locals receive their peso salaries each month, the first thing they do is exchange it for USDT. For them, this is not an investment, but a guarantee that their family can eat well this month.
In Africa, stablecoins have become the 'infrastructure' for cross-border trade. Traditional bank cross-border remittance costs average 6.35% and take 1 to 5 working days. However, using stablecoins, settlements can be completed within minutes, with costs dropping below $1.
But in the investment field, stablecoins have turned into a high-risk game. By 2025, the global stablecoin market size will exceed $250 billion, with over 99% being US dollar stablecoins. This huge market attracts various players and has spawned various scams.
A Chinese Canadian I know was scammed out of his life savings by a stablecoin wealth management project that promised '2% daily interest'. The platform called 'Xinkangjia' used forged Dubai gold and commodity exchanges as backing, ultimately absconding with 13 billion yuan, affecting over 2 million investors.
Ironically, when this platform collapsed, investors found that their money had already been transferred abroad via USDT, with a recovery rate of less than 1%.
02 High-yield stablecoins: traps that will leave you with nothing.
In my eight years of experience, I have witnessed one after another 'high-yield stablecoin' project collapse. In the second half of 2025, there were two particularly typical cases that all investors should be wary of.
Black-box operation stablecoins: a certain X-type stablecoin, claiming to offer high interest for holders, asserts it can provide value 'as stable as the US dollar' and high returns. Its trick is classic: it amplifies users' $160 million principal through circular lending fourfold, then hands it over to unknown fund managers to operate.
What was the result? A loss of $93 million and a 76% drop in coin value. Even worse is the chain reaction—another D-type stablecoin, which treated this as core collateral, was directly dragged down, with a market value evaporating by $100 million.
This type of project is essentially a Ponzi scheme, relying on the money of later investors to pay the returns of earlier ones. Once the funding chain breaks, a collapse is inevitable.
Strategic stablecoins: another popular stablecoin type U relies on so-called 'Delta neutral strategy' to maintain value, and indeed can make money in a bull market. However, during the market adjustment period of 2024-2025, the funding rate frequently turns negative, and platforms not only do not make money but also have to lose money to maintain high-interest commitments.
These projects seem to have a perfect mathematical model, but rely heavily on market conditions. Once market conditions change and balance is disrupted, the death spiral begins.
Any stablecoin project that promises 'zero risk and high returns' is fundamentally a scam. The core function of compliant stablecoins is payment, not interest generation. Truly valuable stablecoins will clearly tell you: we are digital cash, and do not promise any returns.
03 The iron fist of regulation: The life-and-death line of 2025.
In July 2025, the United States (GENIUS Act) was enacted, completely rewriting the rules for stablecoins. The core of this act is simple: to recognize the legal status of stablecoins, but they must be integrated into the existing financial system and cannot undermine the foundations of banks.
The most ruthless is the 'interest prohibition', which directly sentenced 'high-yield stablecoins' to death. The reasoning is simple: if a form of digital cash can circulate like cash and also provide a 5% interest rate, who would still deposit money in a bank? This would trigger a massive transfer of deposits, endangering the stability of the entire financial system.
In Hong Kong, the (Stablecoin Regulation) came into effect on August 1st, and the Monetary Authority clearly stated that only a small number of licenses will be issued initially. But more importantly, the president of the Hong Kong Monetary Authority, Yu Weiman, has repeatedly published articles to cool down stablecoins, emphasizing the need to view their development rationally.
In mainland China, 13 departments jointly held a meeting to clearly define 'stablecoins as a form of virtual currency' and include them under the regulation of illegal financial activities. This means that any commercial activity involving stablecoins within the territory will be strictly prohibited.
The intervention of regulators has actually helped us filter: those who want to raise money through the gimmick of 'stability' will be eliminated, and those who can survive are the ones that return to the essence of payment and comply with transparency.
04 Real demand: Why are stablecoins getting hotter under regulation?
Despite frequent risks and tightening regulations, the global adoption rate of stablecoins is skyrocketing. The fundamental reason is that for many people, it is not an 'investment choice', but a 'survival necessity'.
In the field of cross-border trade, the efficiency of stablecoins is unmatched by traditional banks. Liu Yu, president of Yuan Coin Group, revealed that the core application scenario of their Hong Kong dollar stablecoin HKDR is cross-border payments, which can greatly improve payment efficiency and reduce transaction costs.
A subsidiary of Baogang Group engaged in bulk commodity business has signed a letter of intent with Yuan Coin to support its international trade business with stablecoin settlement. JD Coin Chain has developed retail application scenarios, allowing users to shop with stablecoins at the 'JD Global Sale Hong Kong-Macau Station' soon.
It is also worth noting the 'turning' of traditional giants: Visa launched a new feature allowing global creators to directly receive stablecoin salaries; Stripe invested $1.1 billion to acquire a stablecoin infrastructure company, fully restoring crypto payments.
These giants do not care about 'decentralization beliefs', only about efficiency: stablecoins are faster and cheaper than SWIFT, and have become an irreplaceable underlying infrastructure.
From the data, as of June 2025, the adjusted stablecoin payment transaction count reached 1.6 billion, with transaction amounts reaching $7.3 trillion. Citibank even predicts that by 2030, the stablecoin market value could reach $3.7 trillion in an optimistic scenario.
05 The veteran's guide to avoiding pitfalls: How to cope in 2025?
Based on eight years of experience, I provide ordinary investors with three core suggestions to help you avoid traps and protect your principal.
First, resolutely avoid the 'high-interest temptation'. The core of compliant stablecoins is 'stability', not 'interest generation'. Those projects promising 'zero risk and high returns' are essentially Ponzi schemes.
Truly valuable stablecoins will clearly tell you that they are digital cash and do not promise any returns. If you want to rely on stablecoins for investment, you might as well buy low-risk bonds.
Second, prioritize varieties that are 'transparent and compliant'. Focus on whether there are bank reserve proofs and whether they accept regulatory audits. For example, the consortium formed by the three institutions in Hong Kong's Monetary Authority 'sandbox'—Yuan Coin Innovation Technology, JD Coin Chain, and Standard Chartered Bank—is relatively more reliable.
Stablecoins that hide 'black-box operations' and refuse to disclose the flow of funds should not be touched, no matter how popular they are.
Third, be wary of varieties that rely on 'single strategies'. Stablecoins that overly depend on a single arbitrage strategy or collateral have very poor risk resistance. When the market environment changes, it is easy to trigger a chain reaction.
Diversification, transparency, compliance—these are the three key indicators to determine whether a stablecoin is reliable.
Looking back over these eight years, I have witnessed stablecoins transition from the margins to the mainstream, evolving from simple payment tools to an integral part of global financial infrastructure. Now, stablecoin issuers in Hong Kong are exploring real application scenarios such as cross-border payments and asset on-chain.
The future winners will be those who abandon the fantasy of 'making quick money with stablecoins' and recognize their core value of 'hedging and payment'. In this financial revolution, those who can protect their principal will be the ultimate winners.
The wild era of stablecoins has ended; now it's either compliance or a zero-sum game.
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