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Crypto industry executives share with Cointelegraph what they expect for the now $200 billion stablecoin market next year.
New Year Special
Crypto stablecoins have seen massive successes in 2024, with the fiat currency pegged assets reaching an all-time high circulating supply of over $200 billion in December.
Stablecoins — cryptocurrencies designed to mimic the value of a currency, most popularly the US dollar — are an integral part of the crypto ecosystem and account for 5% of the crypto market value.
With 2025 approaching, Cointelegraph has rounded up the industry’s forecasts and predictions on what key stablecoin trends to expect next year.
Next stop is $300 billion: USDT and USDC will retain dominance
Multiple industry executives and founders told Cointelegraph that Tether’s self-titled token Tether (USDT) and Circle’s USD Coin (USDC) — the two largest stablecoins by market capitalization, will likely retain their dominance in 2025,
Guy Young, founder of the decentralized stablecoin protocol Ethena, predicted that USDT will continue to be the largest stablecoin next year and thinks the total stablecoin market cap will rise to $300 billion.
“Expect we cross $300 billion in outstanding, Tether continues to dominate with their existing moat and the rest of the market is challenged by new fintech and Web2 entrants with their own offerings,” Young told Cointelegraph.
The top five stablecoins by market capitalization as of Dec. 24, 2024. Source: CoinGecko
Alchemy Pay’s chief marketing officer, Ailona Tsik, said that stablecoins like USDT and USDC “have already established themselves as critical tools for global transactions, and their adoption across emerging markets and decentralized applications will likely accelerate.”
“Fiat-backed stablecoins like USDT and USDC are likely to retain their dominance due to their established credibility, liquidity, and the broad ecosystem of users and businesses that depend on them.”
Coinbase, the co-operator of USDC, said in its 2025 outlook that stablecoins are “just getting started” as some analysts project the tokens could grow into a $3 trillion market over the next five years.
Stablecoin payments: Visa expects stablecoin card demand to spike
Visa’s head of crypto, Cuy Sheffield, told Cointelegraph that stablecoin adoption can modernize and streamline global payments, but existing stablecoin spending opportunities are still limited.
“If 2024 was the year stablecoin demand picked back up, 2025 will introduce the next pivotal opportunity — the rise of stablecoin-linked cards,” Sheffield said.
“In 2025, this demand will only increase as wallets look to capitalize on stablecoin adoption and issue stablecoin-linked cards.”
He said Visa would expand its capabilities to enable issuers to settle stablecoin-linked cards directly with the payments giant using the stablecoins.
Crypto platform Uphold CEO Simon McLoughlin is also optimistic about stablecoins’ payment adoption in the coming year.
“2025 will be the year that stablecoins go mainstream as the vehicle for international payments,” McLoughlin said. He highlighted new stablecoins targeting cross-border settlement, such as Ripple Labs’ stablecoin RLUSD, which started trading on Dec. 17.
Ripple started the exchange rollout of its payment-focused stablecoin, Ripple USD (RLUSD), on Dec. 17. Source: Ripple
BitPay’s chief market officer, Bill Zielke, told Cointelegraph that stablecoins accounted for at least a quarter of volume in 2024 on the crypto payments platform despite the tokens making up just 5% of all transactions.
“While the average BTC transaction value at BitPay is just over $1,000, USDC transactions average more than $5,000,” he said.
“We anticipate this trajectory will continue into 2025 as stablecoins further solidify their role in global commerce and business-to-business payments,” Zielke added.
Regulatory divergence and need for consistent regimes will persist
Despite many expressing optimism about stablecoin growth in 2025, regulations around the tokens remain inconsistent globally.
“One of the key challenges we foresee for stablecoins in 2025 is navigating the evolving regulatory landscape,” Alchemy Pay’s Tsik said,
BitGo’s head of stablecoins, Ben Reynolds, said that regulatory uncertainty and the need for greater transparency will remain significant challenges in 2025 until lawmakers provide clear guidance.
An excerpt from PwC’s 2023 report, “Crypto regulation at a glance.” Source: PwC
True Markets founder Vishal Gupta told Cointelegraph that the stablecoin legal landscape will “still face inefficiencies and fragmentation due to inconsistent regulatory regimes.”
He referred to a global regulatory divergence triggered by the introduction of stablecoin rules specific to the European Union, particularly the Markets in Crypto-Assets Regulation (MiCA).
“Regulatory divergence could open opportunities in regions with clear, balanced rules but create challenges where regulations are overly complex or restrictive,” Gupta said.
With US President-elect Donald Trump preparing to take office in January, companies like BitPay expect greater clarity and consistency on how stablecoins and crypto markets are regulated.
2025 stablecoin trends: L2s, yields and interoperability
Many industry execs predicted further stablecoin developments next year in areas such as layer 2s (L2), yields and interoperability.
BitPay’s Zielke said L2 stablecoin adoption on networks like Arbitrum, Optimism and Base will be among the biggest development areas for the tokens in 2025.
Tether CEO Paolo Ardoino said stablecoins “are going to be the most important technology for money in the next few decades, and there will be a consolidation of blockchains and L2s.”
Related: Ethereum layer 2s hold $13.5B stablecoin supply
BitGo’s Reynolds predicted next year would see a push for greater interoperability across blockchains to enable stablecoins to move seamlessly across the crypto sphere, which True Markets’ Gupta noted would unlock “new use cases in both retail and institutional markets.”
Ethereum, Tron and Avalanche are the three largest networks for USDT. Source: Tether
With growing L2 and interoperability adoption, the stablecoin industry will also likely see more yield-generating stablecoin solutions in 2025.
Azeem Khan, chief operating officer at the Ethereum L2 platform Morph, highlighted stablecoins like PayPal USD (PYUSD) offering yield rewards for simply holding the stablecoin. Companies like BitGo have also introduced yield-generating stablecoins in 2024.
“There will be other yield-bearing stablecoins that will enter the market looking to get more holders, and find ways to add them in as payment options in places,” Khan said.
Risk of “exotic” stablecoins
As the demand for stablecoin yields increases, there will be a rise in “exotic” stablecoins, or those designed to offer higher returns, said True Markets’ Gupta.
“The pursuit of higher yields will likely lead to the creation of ‘exotic’ stablecoins that effectively act as structured financial products, embedding risks that retail users may not fully understand,” he added.
Gupta warned that retail investors may be enticed by the promise of higher returns without fully grasping the associated risks, which could potentially result in significant losses.
“Industry players must prioritize transparency, detailed risk disclosures, and education for retail users. Regulators should establish clear standards to protect consumers while maintaining room for innovation.”
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This article first appeared at Cointelegraph.com News
