Original author: shushu
Since Trump took office, the total market value of cryptocurrencies has evaporated by nearly 6 trillion yuan, but the total market value of stablecoins has increased by 1.03% in the past week, exceeding 227 billion US dollars, setting a historical high. The community cant help but wonder what factors are driving the stablecoin market value to rise against the market trend?
As the market value of stablecoins breaks through historical highs, Frax Finance co-founder Sam tweeted that a bear market is a bull market for stablecoins. He said, Another way to say that prices are falling is that the dollar is appreciating. In these environments, on-chain dollar issuers will gain the most, especially when favorable regulations are coming.
Not long ago, CryptoQuant CEO Ki Young Ju also published an analysis that the past alt-season capital flow cycle is outdated. The crypto asset rotation led by Bitcoin has basically ended driven by regulation and institutional adoption. New capital will flow through stablecoins or widely adopted altcoins - this is completely different from the traditional alt-season.
Against the backdrop of crypto assets and U.S. stocks fluctuating downward and both under pressure, stablecoins have risen against the trend to consolidate the U.S. dollars hegemony and may have become the biggest winner in the recent market turmoil.
Relaxed regulation
On February 27, U.S. crypto-friendly Senator Cynthia Lummis said at the first hearing of the Senate Banking Digital Assets Subcommittee yesterday, “We are about to develop a bipartisan legislative framework for stablecoins and market structure.”
At the first White House crypto summit last Friday night, where not much news was leaked, Trump expressed his hope to receive a stablecoin legislative bill before the August recess of Congress to advance federal government regulatory reforms on cryptocurrencies, and reiterated his hope that the U.S. dollar would remain dominant for a long time.
U.S. Treasury Secretary Scott Bessent promised to use digital assets to consolidate the dollars position as a global reserve currency. He said, We will think deeply about the stablecoin system. As President Trump has instructed, we will maintain the United States position as the worlds leading reserve currency, and we will use stablecoins to achieve this.
This statement highlights the US governments concerns about macroeconomic and geopolitical uncertainties, which may lead to a decline in foreign investors demand for US debt, thereby pushing up Treasury yields. Over the past year, the top two holders of US Treasury bonds, Japan and China, have continued to reduce their holdings of US debt. In order to maintain the US dollars status as a global reserve currency, it is necessary to ensure the continued demand for US debt in the international market.
By holding U.S. Treasuries as reserve assets, stablecoins can help lower Treasury yields while expanding the global circulation of the U.S. dollar. Stablecoins need to reserve sufficient U.S. dollars to meet investor redemption needs. Currently, Tether is one of the largest holders of three-month U.S. Treasury bonds.
The total market value of stablecoins has surged by $50 billion since Trump’s election; Source: DeFiLlama
Specifically at the policy level, the United States has proposed two stablecoin bills - the House of Representatives Stablecoin Transparency and Accountability Act (STABLE Act) and the Senates United States Stablecoin Innovation Guidance and Establishment Act (GENIUS Act), which aim to regulate stablecoin issuers through licensing requirements, risk management rules and 1:1 reserve support.
The two bills propose different frameworks but agree on strict compliance measures. Both support private, dollar-backed stablecoins and prohibit central bank digital currencies (CBDCs).
The main differences include:
Regulatory oversight (GENIUS allows states to regulate issuers until market cap reaches $10 billion; STABLE allows an opt-out of federal regulation if state-level rules meet criteria)
Reserve requirements (STABLE allows the use of Treasury bonds, bank deposits, and central bank reserves, while GENIUS also includes money market funds and reverse repo)
Consumer protection (GENIUS focuses on transparency and enforcement, while STABLE requires one-to-one reserves and prohibits algorithmic stablecoins)
Tighter regulation could challenge Tethers dominance, as both bills require monthly audits, asset segregation, and strict reporting, potentially forcing exchanges to delist non-compliant stablecoins, similar to the impact of the EUs MiCA. These laws would also pave the way for the legalization of stablecoins, attracting institutional adoption while creating barriers for less transparent issuers. If passed, they would establish clear guidelines for stablecoin issuers to ensure market stability and compliance.
This morning, FOX Business reporter Eleanor Terrett posted on social media, As far as I know, an updated version of Republican Senator Bill Hagertys stablecoin bill, the GENIUS Act, will be released tonight (local time). As of this morning, the U.S. Senate Banking Committee still plans to amend the bill on Thursday.
The new version of the document expands the reciprocity terms for overseas payment stablecoins, adding reserve requirements, supervision, anti-money laundering and counter-terrorism measures, sanctions compliance, liquidity requirements and risk management standards, aiming to promote international transactions and achieve interoperability with overseas dollar-denominated payment stablecoins.
The FOMO wave of stablecoins is coming. What opportunities are there in the future?
Against the backdrop of Trumps clear hope to clarify the stablecoin-related bill before August, governments including Japan, Thailand, and the US government are working to adopt stablecoins.
On March 10, the Securities and Exchange Commission of Thailand has identified stablecoins USDT and USDC as compliant cryptocurrencies. This approval means that USDT and USDC can be legally traded in Thailand, paving the way for stablecoins to be listed on regulated trading platforms in Thailand, and also laying the foundation for the widespread application of USDT and USDC in the payment field in Thailand.
On the same day, the Japanese Cabinet announced the approval of a proposal to reform laws related to crypto brokerages and stablecoins. According to an announcement from the Financial Services Agency (FSA) of Japan, the government has approved a cabinet resolution to amend the Payment Services Act. The bill will allow crypto companies to operate as intermediary businesses. This means that brokers will no longer need to apply for the same type of license as crypto trading platforms and crypto wallet operators. The bill also provides more flexibility for stablecoin issuers in terms of the types of assets that support their tokens.
According to the Financial Times, some of the worlds largest banks and fintech companies are eager to launch their own stablecoins in an effort to capture a share of the cross-border payments market that they expect will be reshaped by cryptocurrencies.
Last month, Bank of America signaled its intention to issue its own stablecoin, joining established payment providers such as Standard Bank, PayPal, Revolut and Stripe in its bid to compete with a business dominated by cryptocurrency groups such as Tether and Circle.
The change comes after a strong regulatory backlash against Meta’s Libra stablecoin six years ago, and has been further fueled by U.S. President Trump’s active support for cryptocurrencies. “It’s like selling shovels in the stablecoin craze,” said Simon Taylor, co-founder of fintech consultancy 11:FS, who likened it to FOMO.
In addition to Bank of America, other major players in traditional finance (TradFi) are also preparing for the development of stablecoins.
Standard Chartered Bank: Hong Kong dollar stablecoin project is being promoted
PayPal: Plans to expand the issuance of PYUSD in 2025
Stripe: Acquires Bridge Stablecoin Platform for $1.1 Billion
Revolut: Exploring the possibility of issuing stablecoins
Visa: Using stablecoins for payments and global business
Previously, an increase in the supply of stablecoins often drove up cryptocurrency prices, as these tokens were primarily used as short-term holding tools between transactions. Now, the use of stablecoins is moving beyond speculation—SpaceX uses stablecoins to collect payments from Starlink sales in Argentina and Nigeria; ScaleAI uses them to pay overseas contractors.
The most direct trading opportunity is to bet on which public chains mainstream institutions will choose to issue new stablecoins. Currently, Ethereum, Base, Tron and Solana are the main candidate public chains. On February 26, Jesse Pollak, head of the Base protocol, said that he plans to launch stablecoins for all global currencies on Base this year.
It can be seen that both the on-chain world and traditional finance are making plans around the United States and US dollar stablecoins. As for the altcoin season, perhaps as CryptoQuant CEO said - the capital flow cycle of the past altcoin season is outdated.
