Author: Nancy, PANews
As the market size of stablecoins continues to expand, the fundamentals are undergoing multifaceted upgrades. Currently, from the thawing cooperation between Binance and Circle, to the intensive layout of crypto giants, to the frequent financing activities and the gradually improving policy environment, the liquidity and application scenarios of the stablecoin track are rapidly expanding, accelerating its emergence as a core narrative in this cycle.
Binance and Circle 'make peace', leading giants accelerate the expansion of stablecoins.
On December 11, Binance officially announced a strategic partnership with Circle, the issuer of the USDC stablecoin, to expand the adoption of USDC and support the development of a global digital asset and broader financial services ecosystem. According to the agreement, Binance will deeply integrate USDC into its product line to provide trading, savings, and payment services for its 240 million global users, and will include USDC in the company's reserves. Circle will provide Binance with technical support, liquidity, and complementary tools.
In this regard, Binance CEO Richard Teng stated that both parties will jointly promote the innovation and application scenarios of stablecoins. Circle CEO Jeremy Allaire emphasized that with Binance's rapidly developing financial super-app ecosystem, USDC is expected to achieve wider application.
This 'historic reconciliation' has shocked the crypto community, especially given the adversarial background of the two companies. Looking back at last year, Binance's jointly issued stablecoin BUSD with Paxos faced scrutiny from U.S. regulators, forcing Binance to eventually withdraw this important business line from the center stage of stablecoins. Circle is believed to be the behind-the-scenes 'whistleblower' in this investigation; according to Bloomberg, Circle had reported to the New York State Department of Financial Services (NYDFS) in the fall of 2022 that Binance did not have sufficient reserves to support the issuance of BUSD tokens through Paxos.
However, the current cooperation not only signifies a handshake between the two major competitors but also lays a new foundation for the larger-scale expansion of stablecoins.
In fact, leading crypto companies have been increasingly active in the stablecoin space during this period. For example, recently Binance has continuously expanded the use of multiple stablecoins, including integrating the stablecoin FDUSD on the Sui network and integrating USDT on the Aptos network.
Tether has also recently announced several important updates. For example, Tether has significantly increased the minting volume of USDT, with a total minting volume reaching $4 billion this month, and over 100 million on-chain wallets currently holding USDT. USDT has been recognized as a virtual asset by the Abu Dhabi Global Market. Meanwhile, Tether is accelerating its expansion across multiple blockchains, including the launch of USDT on the TON chain and plans to introduce it on the Aptos network.
Circle is also accelerating its layout. Recently, Circle announced the launch of the Cross-Chain Transfer Protocol CCTP V2, reducing settlement time from several minutes to seconds, with plans to support Ethereum, Base, and Avalanche networks by early 2025, and to expand to more blockchains in the future. At the same time, Circle also announced the launch of USDC on Aptos and plans to support platforms like Unichain.
Additionally, Ripple's stablecoin RLUSD has also announced approval from the New York Department of Financial Services, initially open only to institutional clients.
These developments indicate that the stablecoin market is rapidly evolving, and the accelerated layout of leading companies will undoubtedly drive the penetration and application of this sector in the global financial system. Additionally, PANews recently summarized the progress in the European market in the article (EU Launches Stablecoin War: 21 Issuers Compete, Circle Leads the Way, Tether Supports 'Agents').
The total market capitalization of stablecoins has surpassed $200 billion, and the ecosystem is thriving under the drive of investment and financing.
The stablecoin market is reaching a milestone moment. According to DeFiLlama data, as of December 12, the total market capitalization of stablecoins has reached a historical high, exceeding $200 billion. Asset management company Bitwise predicts that the market size of stablecoins may double next year, reaching $400 billion.
In fact, the role of stablecoins in the global financial system is becoming increasingly prominent, and their application scenarios are becoming more diversified. According to a recent research report by Standard Chartered Bank, stablecoins are evolving from early usage only in cryptocurrency exchanges to becoming important tools in the global financial sector. Particularly in emerging markets where traditional cross-border banking services are constrained, stablecoins provide a fast and reliable digital dollar asset transfer solution. Surveys show that in countries like Brazil, Turkey, Nigeria, India, and Indonesia, 69% of respondents use stablecoins as a currency substitute, 39% for payment of goods and services, and another 39% for cross-border payments.
Especially now, with the rise of more innovative stablecoin projects, the ecosystem is becoming richer while the market's demand for this tool continues to rise, and the influx of capital provides more possibilities and imaginative space for the further development of stablecoins. According to PANews statistics, at least 23 stablecoin projects have announced financing in the second half of this year, collectively raising over $1.86 billion, with Bridge's financing amount reaching as high as $1.68 billion, primarily due to its acquisition by payment giant Stripe for $1.1 billion in October this year.
For example, recently Binance Labs announced an investment in the Solana stablecoin trading infrastructure project Perena, aimed at solving the fragmentation issue of the stablecoin ecosystem and lowering the capital requirements for issuing new stablecoins through its product Numéraire. Platform users can mint stablecoins through this agreement, obtain tokenized real-world asset returns, and utilize a layered collateralized debt position system to achieve customized risk-return allocations.
The stablecoin-driven financial platform KAST has also announced the completion of a $10 million seed round of financing, co-led by Peak XV and HongShan, investment companies spun off from the investment giant Sequoia. This platform allows users to hold and use stablecoins through traditional payment channels and offers credit card services usable at standard merchant networks, allowing users to spend their stablecoin assets at merchants that do not support crypto payments.
The cross-border stablecoin payment company Sphere has completed a $5 million financing led by Coinbase Ventures and Kraken Ventures. This agreement enables stablecoin cross-border payments between enterprises through cooperation with global fintech companies and licensed remittance service providers, allowing stablecoins to be exchanged for local fiat currencies in supported regions.
The continuous advancement of these innovative projects not only injects new vitality into the development of stablecoins but also gradually expands the role of stablecoins in the global financial ecosystem.
At the same time, the regulatory environment for global stablecoins is gradually improving, with policy developments providing institutional guarantees for the growth of stablecoins. Hong Kong's latest (Stablecoin Regulatory Draft) will be submitted for its first reading to the Legislative Council on December 18, proposing a regulatory framework for fiat-backed stablecoin issuers, marking a significant step in stablecoin regulation. The Central Bank of Brazil is expected to lift the ban on stablecoin self-custody, indicating a more open regulatory stance. The upcoming (Markets in Crypto-Assets Regulation) (MiCA) from the EU is also expected to become an important milestone for global stablecoin regulation, providing more compliance guarantees for the stablecoin market. Meanwhile, the yet-to-be-approved (Payment Stablecoin Clarity Act) in the U.S. could provide licenses to stablecoin issuers, and Trump's upcoming administration is believed to accelerate the introduction of this crypto legislation.
Overall, under the active layout of leading crypto companies and the continuous influx of capital, stablecoins are opening up more application scenarios to meet the urgent demand of the global financial market for convenient, secure, and efficient payment tools, thus accelerating the transition of stablecoins from the crypto periphery to the mainstream financial market. Meanwhile, the gradual advancement of policies in various countries is also paving the way for the compliance and standardization of the stablecoin market.
