Stablecoin hype grows, total supply cracks $300 billion
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Illustration: Gabriella Turrisi/Axios
Stablecoin supply just passed $300 billion, another milestone making one claim increasingly hard to deny: stablecoins are a success story destined for big things.
Why it matters: These instruments will soon emerge from a legal gray area in the U.S., with the potential to profoundly change how money moves around the world.
State of play: At $300 billion, stablecoins now rank among systemically relevant financial products — on par with some of the largest U.S. retail money market funds and rivaling the scale of some major regional banks.
- They've gotten there largely mired in regulatory uncertainty in the U.S., though that headwind will soon be lifted.
- In July, Congress passed a law establishing a regulatory framework for stablecoins designed for payments and settlement. The law, called Genius, is not yet effective, though it will be no later than January 2027 — and that date could move up considerably if regulators act fast with pending rulemaking.
How it works: Most stablecoins (though not all) are backed one-for-one by highly liquid assets, mostly U.S. treasuries (since most stablecoins track the dollar).
- This means issuers guarantee that one stablecoin can be withdrawn for $1 at any time.
The big picture: The hype around stablecoins is their potential to profoundly shake up the world of payments, specifically by speeding them up, lowering transaction costs, and making settlement available 24 hours a day.
- In the last year, more and more industries — from traditional finance to fintechs to retail — have started making plans for how to get in. That includes names like PayPal, Stripe, Visa, Mastercard, Amazon and Walmart.
- Many have been betting that stablecoins will be a trillion-dollar market soon — for some the only question is how many trillions and how fast it gets there.
Threat level: It's worth noting that not all the stablecoins in the $300 billion tally are the sort of super safe kind that the U.S.'s Genius law approves of.
- There's weird stuff out there, but by far the majority of stablecoin issued come in the vanilla flavor. In fact, just two stablecoins, Tether's USDT and Circle's USDC, represent over 80% of the market.
What we're watching: Fintech giant Stripe this week it announced a new program, Open Issuance, to make it easy for a company to issue a white-labeled stablecoin, just as it previous did for adding payments to websites.
