It took us almost 2 weeks to understand the world of stablecoins. And we think this 16 page document is no justice to what stablecoins hold for future. Nothing better summarises stablecoin than Treasury secretary Bessent's following words: "Stablecoins represent a revolution in digital finance. The dollar now has an internet-native payment rail that is fast, frictionless, and free of middlemen. This groundbreaking technology will buttress the dollar’s status as the global reserve currency, expand access to the dollar economy for billions across the globe, and lead to a surge in demand for US Treasuries, which back stablecoins." We believe Bessent led US treasury effort is to ensure stablecoins are expanded rapidly across the globe. It is a way of dollarisation backed by demand for US treasuries. It will help US to get more non-US financial assets move in to USD and at the same time help in absorbing the increase in US t-bill supply. Suffice to say Bessent is playing a very smart move to not only get Dollar more globalised while at the same time getting the WAM (Weighted Average Maturity) of outstanding treasuries lower by increasing the t-bill share in overall treasury outstanding debt to the level of 25% by end CY26 compared to current 20% levels. Stablecoins currently in circulation have a collective market capitalization of over $250 billion. Almost all of these—approximately 99%—are pegged to the U.S. dollar, while the rest are pegged to other fiat currencies or commodities like gold. Their market cap surged from $20bn in 2020 to $250bn, with $28 trn in transfer volume last year, outpacing Visa and Mastercard. Over two-thirds of crypto transactions now use stablecoins as the quote currency, reflecting how integral USD-pegged tokens have become to exchange liquidity and price stability. Stablecoin transactions have increased by 598% since 2020 as stablecoins increasingly gain momentum as both a medium of exchange and a store of value. While DeFi and trading remain dominant, payments and remittances are surging with costs <3%, far below traditional systems (6%). 83% of fiat-pegged stablecoins are USD-backed. Over $120bn in USD reserves held by stablecoins, with Tether alone holding $99bn in US T-bills, making it a top global holder of US debt. Stablecoins promise low cost, 24/7, borderless USD payments, attractive for trade, remittances, and settlements. Active stablecoin wallet addresses rose from 22.8mn in Feb 2024 to over 35mn in Feb 2025 – a 53% increase. Mentions of stablecoins in SEC filings more than doubled in early 2025. From Jan 2024 to Jan 2025, stablecoins mentions averaged 48 times per month. In February - April 2025, the figure surged to 103 average monthly mentions. Regulatory clarity means new entrants are coming in droves. Now everyone needs a stablecoin strategy. The melding of traditional payment and crypto rails is occurring through both stablecoin-linked cards and new internet-native platforms. Stablecoin transaction volumes are now on the same level as major payment networks. They are no longer just margin collateral on centralized exchanges (CEXs). Stablecoins are expanding access to capital and credit for underserved people and businesses globally. Stablecoins are also an alternative to China’s BRI’s e-RMB initiative. The Trump administration’s promotion of dollar-backed stablecoins represents a strategic effort to reinforce the dollar’s global role amid increasing discussions on dedollarization. Stablecoin flows are already having a direct impact on short-term treasury markets. According to research from the Bank for International Settlements, a multi-billion-dollar weekly inflow into stablecoins is linked with a ~2.5 bp drop in 3-month treasury bill yields after 10 days, and upwards of ~5 bps reduction after 20 days. This effect is “comparable to that of small-scale quantitative easing on long-term yields.” Equivalent outflows have a greater effect, raising yields ~6-8bps within 10 days. Whatever way we see it, whether it be cost of transactions, or the speed of transactions or as an alternative to e-RMB or as a means to increase funding support for US treasury, Stablecoins will only get bigger and better. As AI truly dawns on a fragmented world order, looking for cheaper & faster ways of transaction across borders, stablecoins will be the safest payment solutions. U.S. dollar stablecoins could be particularly appealing to those in high inflation countries or to those without easy or affordable access to dollar cash or banking services. Someday stablecoins will replace Gold as the global safe haven reserve.
