Author: Helen Partz, CoinTelegraph; Translation: Bai Shui, Jinse Finance
Cryptocurrency stablecoins achieved significant success in 2024, with circulation reaching an all-time high of over $200 billion in December.
Stablecoins—cryptocurrencies designed to mimic the value of fiat currency, most commonly the dollar—are an indispensable part of the crypto ecosystem, accounting for 5% of its market cap.
As 2025 approaches, this article summarizes industry predictions and forecasts regarding the major trends for stablecoins in the coming year.
Next stop is $300 billion: USDT and USDC will maintain dominance
Multiple industry executives and founders stated that Tether's USDT and Circle's USD Coin (the two largest stablecoins by market cap) are likely to maintain dominance in 2025.
Guy Young, founder of the decentralized stablecoin protocol Ethena, predicts that USDT will continue to be the largest stablecoin next year, with the total market cap of stablecoins rising to $300 billion.
"I expect our circulation to exceed $300 billion, with Tether continuing to dominate due to its existing moat, while the rest of the market faces challenges from new fintech and Web2 entrants and their own products," Young noted.
As of December 24, the top five stablecoins ranked by market cap. Source: CoinGecko
Ailona Tsik, CMO of Alchemy Pay, stated that stablecoins like USDT and USDC "have become important tools for global transactions, and their adoption in emerging markets and decentralized applications may accelerate."
Stablecoins supported by fiat currencies like USDT and USDC may maintain their dominance due to their established credibility, liquidity, and the wide user and enterprise ecosystem that relies on them.
Coinbase, a partner of USDC, stated in its 2025 outlook that stablecoins are "just getting started," with some analysts predicting that these tokens could grow into a $3 trillion market within the next five years.
Stablecoin Payments: Visa expects a surge in demand for stablecoin cards
Visa's cryptocurrency chief Cuy Sheffield pointed out that the adoption of stablecoins could modernize and simplify global payments, but existing opportunities for stablecoin consumption remain limited.
"If 2024 is a year of rebound for stablecoin demand, then 2025 will present the next key opportunity: the rise of stablecoin-linked cards," Sheffield said.
"By 2025, as wallets seek to leverage stablecoin adoption and issue stablecoin-linked cards, this demand will only increase."
He said that Visa will expand its capabilities to allow issuers to use stablecoins for direct settlement with payment giants for stablecoin-linked cards.
Simon McLoughlin, CEO of cryptocurrency platform Uphold, is also optimistic about the increased payment adoption rates in the coming year.
"2025 will be a year when stablecoins enter the mainstream as international payment tools," McLoughlin said. He highlighted new types of stablecoins aimed at cross-border settlements, such as Ripple Labs' Ripple USD (RLUSD), which began trading on December 17.
Ripple will start transferring RLUSD out of exchanges on December 17. Source: Ripple
Bill Zielke, CMO of BitPay, said that while stablecoins only make up 5% of all transactions, they accounted for at least a quarter of the transaction volume on cryptocurrency payment platforms by 2024.
"While the average BTC transaction value on BitPay is slightly above $1,000, the average USDC transaction exceeds $5,000," he said.
"We expect that as stablecoins further solidify their role in global commerce and business-to-business payments, this trend will continue into 2025," Zielke added.
Regulatory divergence and the need for a consistent framework will persist
Despite the optimism surrounding stablecoin growth in 2025, global regulation of stablecoins remains inconsistent.
Tsik from Alchemy Pay stated, "We foresee that one of the main challenges for stablecoins in 2025 will be dealing with the changing regulatory environment."
Ben Reynolds, head of stablecoins at BitGo, stated that regulatory uncertainty and the demand for increased transparency will remain significant challenges in 2025 until lawmakers provide clear guidance.
PwC's 2023 Crypto Regulation Report's "Overview of Crypto Regulation." Source: PwC
Vishal Gupta, founder of True Markets, noted that the legal environment for stablecoins "will still face issues of inefficiency and fragmentation due to inconsistent regulatory frameworks."
He mentioned the global regulatory divergence triggered by the EU's introduction of specific stablecoin rules, particularly the regulation of the crypto asset market (MiCA).
"Regulatory divergence may create opportunities in regions where rules are clear and balanced, but it will also pose challenges in regions where regulations are overly complex or restrictive," Gupta stated.
As Donald Trump prepares to take office in January, companies like BitPay hope for clearer and more consistent regulations regarding stablecoins and the crypto market.
2025 Stablecoin Trends: L2, Yields, and Interoperability
Many industry executives predict that stablecoins will further develop in areas such as Layer 2 (L2), yields, and interoperability in the coming year.
Zielke from BitPay stated that the adoption of L2 stablecoins on networks like Arbitrum, Optimism, and Base will be one of the biggest areas of development for tokens in 2025.
Paolo Ardoino, CEO of Tether, stated that stablecoins "will become the most important monetary technology in the coming decades, and blockchain and L2 will integrate."
Reynolds from BitGo predicts that next year will drive greater interoperability between blockchains, enabling stablecoins to seamlessly transfer within the cryptocurrency space. Gupta from True Markets noted that this will unlock "new use cases for retail and institutional markets."
Ethereum, Tron, and Avalanche are the three main networks for USDT. Source: Tether
With the increasing adoption of L2 and interoperability, the stablecoin industry may also see more yield-generating stablecoin solutions by 2025.
Azeem Khan, COO of Ethereum L2 platform Morph, emphasized that stablecoins like PayPal USD can offer yield rewards simply by holding the stablecoins. Companies like BitGo are also launching yield-generating stablecoins in 2024.
"Other yield-generating stablecoins will enter the market seeking to attract more holders and find ways to incorporate them as payment options," Khan said.
"Risks of 'exotic' stablecoins"
Gupta from True Markets stated that as demand for stablecoin yields increases, 'exotic' stablecoins (those aimed at providing higher returns) will proliferate.
"The pursuit of higher yields may lead to the emergence of 'exotic' stablecoins that effectively act as structured financial products, concealing risks that retail users may not fully understand," he added.
Gupta warns that retail investors may be lured by promises of higher returns without fully grasping the associated risks, which could lead to significant losses.
Industry participants must prioritize transparency, detailed risk disclosure, and education for retail users. Regulators should establish clear standards to protect consumers while maintaining space for innovation.
