Author: Helen Partz, CoinTelegraph; Translated by: Bai Shui, Jinse Finance
Crypto stablecoins achieved great 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 integral part of the crypto ecosystem, accounting for 5% of its market cap.
As 2025 approaches, this article summarizes industry predictions and forecasts for the major trends in stablecoins next year.
Next stop is $300 billion: USDT and USDC will maintain dominance
Several industry executives and founders indicated 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
Alchemy Pay's Chief Marketing Officer Ailona Tsik 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 like USDT and USDC, which are backed by fiat currencies, are likely to maintain their dominance due to their established credibility, liquidity, and the broad 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 these tokens could grow into a $3 trillion market in the next five years.
Stablecoin payments: Visa expects demand for stablecoin cards to surge
Visa's cryptocurrency chief Cuy Sheffield noted that the adoption of stablecoins can modernize and simplify global payments, but existing consumption opportunities for stablecoins remain limited.
"If 2024 is a year of recovery for stablecoin demand, then 2025 will bring the next major 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 Visa will expand its capabilities to allow issuers to use stablecoins to settle directly with payment giants tied to stablecoin-linked cards.
Simon McLoughlin, CEO of crypto platform Uphold, is also optimistic about the increased payment adoption rates in the coming year.
"2025 will be the year stablecoins enter the mainstream as international payment tools," McLoughlin said. He highlighted new types of stablecoins for cross-border settlements, such as Ripple Labs' Ripple USD (RLUSD), which started trading on December 17.
Ripple will start transferring RLUSD from exchanges on December 17. Source: Ripple
BitPay's chief marketing officer Bill Zielke stated that although stablecoins only account for 5% of all transactions, by 2024, they will represent at least a quarter of transaction volume on crypto payment platforms.
"While BitPay's average BTC transaction value is slightly above $1,000, USDC transactions average over $5,000," he said.
"We expect this trend to continue into 2025 as stablecoins further solidify their role in global commerce and enterprise-to-enterprise payments," Zielke added.
Regulatory divergence and the demand for a cohesive system will persist
Despite many being optimistic about the growth of stablecoins in 2025, regulatory approaches towards stablecoins remain inconsistent worldwide.
Alchemy Pay's Tsik stated, "We foresee that one of the main challenges for stablecoins in 2025 will be adapting to an evolving regulatory environment."
BitGo's stablecoin head Ben Reynolds stated that until lawmakers provide clear guidance, regulatory uncertainty and the demand for increased transparency will remain significant challenges in 2025.
PwC's 2023 Crypto Regulation Report's "Overview of Crypto Regulation." Source: PwC
True Markets founder Vishal Gupta pointed out that the legal environment for stablecoins "will still face issues of inefficiency and fragmentation due to inconsistent regulatory regimes."
He mentioned the global regulatory divergence triggered by the EU's introduction of specific stablecoin rules, particularly the Markets in Crypto-Assets Regulation (MiCA).
"Regulatory divergence might present opportunities in areas where rules are clear and balanced, but it also poses challenges in regions where regulations are overly complex or restrictive," Gupta stated.
With President-elect Donald Trump preparing to take office in January, companies like BitPay hope for clearer and more consistent regulation of stablecoins and the crypto market.
2025 Stablecoin Trends: L2, Yields, and Interoperability
Many industry executives predict that next year, stablecoins will further develop in areas such as Layer 2 (L2), yields, and interoperability.
BitPay's Zielke 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.
Tether's CEO Paolo Ardoino stated that stablecoins "will become the most significant monetary technology in the coming decades, with blockchain and L2 integrating."
BitGo's Reynolds forecasts that next year will drive greater interoperability between blockchains, enabling stablecoins to transfer seamlessly across the crypto space. True Markets' Gupta pointed out that this will unlock "new use cases for retail and institutional markets."
Ethereum, Tron, and Avalanche are the three major networks for USDT. Source: Tether
As the adoption of L2 and interoperability becomes more widespread, the stablecoin industry may see more yield-generating stablecoin solutions in 2025.
Azeem Khan, COO of Ethereum L2 platform Morph, emphasized that stablecoins like PayPal USD can provide yield rewards just by holding the stablecoin. Companies like BitGo are also launching yield-generating stablecoins in 2024.
"There will be other yield-generating stablecoins entering the market seeking to gain more holders and find ways to add them as payment options," Khan said.
'Exotic' stablecoin risks
True Markets' Gupta stated that as demand for stablecoin yields increases, 'exotic' stablecoins (i.e., stablecoins designed to provide higher returns) will rise.
"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 tempted by promises of higher returns without fully grasping the associated risks, which could lead to significant losses.
Industry participants must prioritize transparency, detailed risk disclosures, and education for retail users. Regulators should establish clear standards to protect consumers while maintaining space for innovation.
