Author: Arthur Azizov, CEO of B2BinPay, CoinTelegraph; Translated by Bai Shui, Golden Finance.
The stablecoin market will conclude 2024 with extraordinary developmental achievements. What should we expect in 2025?
Before looking to the future, we must examine what we have left behind.
The stablecoin market in 2024.
In 2024, the trend from previous years continues. Major issuers like Tether and Circle have experimented with stablecoins pegged to currencies other than the dollar, but adoption has progressed slowly. Euro-backed stablecoins remain a relatively low market cap niche product, even major players find it challenging.
The market has shown a clear preference for Tether's USDT and Circle's USD Coin, with few willing to try something new. This hesitation may stem from the shadows of past collapses, such as the 2022 collapse of Terraform Labs and its stablecoin TerraUSD (UST). This collapse shocked people's trust in algorithmic and decentralized stablecoins, which, despite still having supporters, hold a small market share compared to USDT and USDC.
Overall, 2024 is looking very positive for the crypto world. Bitcoin has soared to $100,000, regulatory frameworks are being developed globally, and traditional financial institutions are beginning to enter the market. The total issuance of stablecoins continues to grow and set new records. In Singapore, the value of stablecoin payments has reached $1 billion, and its usage is expected to continue to rise globally.
Looking ahead, here are four predictions for the stablecoin market in 2025.
Regulated stablecoins are on the rise.
In 2025, we may see financial institutions issuing more stablecoins. Tether has proven the profitability of this model, netting $5.2 billion in the first half of 2024 after depositing reserves into U.S. Treasury bonds.
The strategy is as follows: 1) Launch regulated stablecoins, 2) Negotiate with reputable exchanges to promote them, 3) Achieve stable returns by investing in fiat reserves. To attract customers, exchanges have waived fees on stablecoins. This formula is too appealing for traditional financial giants to ignore.
Banks involved in custody services.
The EU's regulation of crypto asset markets (MiCA) will be fully implemented in January 2025, serving as a significant catalyst. MiCA requires stablecoin issuers to obtain licenses and provides a clear framework for financial institutions to enter the cryptocurrency market.
This clarity in regulation will open the door for banks to offer custody services, which is crucial for integrating cryptocurrencies into the traditional financial system. Custody solutions enable banks to securely store digital assets on behalf of clients, serving institutional investors and cautious retail users.
Shifts in the European market.
Currently, there are concerns about Tether's USDT stablecoin. It dominates the market but lacks the licenses required for MiCA compliance, and there are rumors that exchanges are preparing to delist USDT for European users. If Tether fails to obtain licensing, it could lose a significant market share in the region. Such a moment could open the door for regulated alternatives like USDC, which has already received approval in Europe.
The MiCA framework may encourage local participants to use euro-backed stablecoins to enter the market, thereby creating more competition and potentially shifting market dynamics away from dollar-centric options.
Stablecoins pegged to local currencies.
Another trend to watch in 2025 is the growth of stablecoins pegged to local currencies. In 2024, the Central Bank of the United Arab Emirates approved the launch of the dirham-backed stablecoin AE Coin, which is said to be the first stablecoin regulated by that central bank.
As countries increasingly seek digitalization of their economies, local stablecoins will be integrated into local banking systems.
Outlook for the stablecoin landscape in 2025.
The overall development trajectory of stablecoins is promising. By 2025, the stablecoin market will not only grow but also mature.
Clearer regulations, new entrants, and broader adoption will transform stablecoins from niche financial tools into mainstream asset classes. Stablecoins will offer faster, cheaper, and more inclusive financial services, integrating with traditional finance.
2025 will mark the beginning of mass adoption for stablecoins. Prior to this, as MiCA lands in Europe and President Donald Trump is elected in the United States, more new players are expected to enter the market. The market is also anticipating new, more friendly regulations regarding cryptocurrencies.
The total market capitalization of USDT and USDC could double or even triple, and the overall market size is expected to grow. Localized stablecoins will also play an increasingly significant role, potentially challenging the dominance of the dollar and diversifying the market.
