Author: shushu

Since Trump took office, the total market value of cryptocurrencies has evaporated by nearly 6 trillion yuan, but the total market value of stablecoins has grown by 1.03% in the past week, breaking through $227 billion, a new historical high. The community cannot help but wonder what factors are driving the rise in the market value of stablecoins against the market trend?

With the market value of stablecoins hitting a new high, Frax Finance co-founder Sam tweeted that the bear market is a bull market for stablecoins, saying, "The other way to say price decline is dollar appreciation, and in these environments, on-chain dollar issuers will benefit the most, especially with favorable regulation coming soon."

Not long ago, CryptoQuant CEO Ki Young Ju also wrote an article analyzing that the past Altcoin season capital flow cycle is outdated. "The Bitcoin-dominated crypto asset rotation has essentially ended with the push of regulation and institutional adoption. New capital will flow through Stablecoins or widely adopted Altcoins - this is completely different from the traditional Altcoin season."

Against the backdrop of the crypto assets and US stocks oscillating downward and under pressure, the rise of Stablecoins against the trend has consolidated the hegemony of the US dollar, and may have become the biggest winner in the recent market turmoil.

Regulatory Relaxation

On February 27, US crypto-friendly Senator Cynthia Lummis said at the first hearing of the Senate Banking Digital Assets Subcommittee that "We are about to develop a bipartisan legislative framework for Stablecoins and market structure."

And at the White House's first crypto summit last Friday night, which saw little news flow out, Trump said he hopes to receive a Stablecoin legislation bill before Congress adjourns in August to advance the federal government's regulatory reform of cryptocurrencies, and reiterated his hope that the US dollar will "maintain its dominant position in the long run".

US Treasury Secretary Scott Bessent pledged to use digital assets to consolidate the US dollar's position as the global reserve currency, saying "We will think deeply about the Stablecoin system, and as President Trump has directed, we will maintain the US's position as the world's leading reserve currency, and we will use Stablecoins to achieve this."

This statement highlights the US government's concerns about macroeconomic and geopolitical uncertainties, which could lead to a decline in foreign investor demand for US Treasuries, pushing up bond yields. Over the past year, Japan and China, the two largest holders of US Treasuries, have continued to reduce their holdings of US Treasuries. To maintain the US dollar's position as the global reserve currency, the sustained demand of international markets for US Treasuries must be ensured.

By holding US Treasuries as reserve assets, Stablecoins can help lower bond yields while simultaneously expanding the global circulation of the US dollar. Stablecoins need sufficient US dollar reserves to meet investor redemption demands, and Tether is currently one of the largest holders of 3-month US Treasuries.

The total market value of Stablecoins has increased by $50 billion since Trump's election; Source: defillama

At the policy level, the US has proposed two Stablecoin bills - the House's Stablecoin Transparency and Accountability Act (STABLE Act) and the Senate's Stablecoin Innovation and Protection Act (GENIUS Act) - aimed at regulating Stablecoin issuers through licensing requirements, risk management rules, and 1:1 reserve backing.

These two bills propose different frameworks but reach a consensus on strict compliance measures. Both support private, US dollar-backed Stablecoins and prohibit Central Bank Digital Currencies (CBDCs).

The main differences include:

• Regulatory oversight (GENIUS allows state-level regulation of issuers until the market cap reaches $10 billion; STABLE allows opting out of federal regulation if state-level rules meet the standard)

• Reserve requirements (STABLE allows the use of Treasuries, bank deposits, and central bank reserves, while GENIUS also includes money market funds and reverse repos)

• Consumer protection (GENIUS focuses on transparency and enforcement, while STABLE requires 1:1 reserves and bans algorithmic Stablecoins)

Stricter regulation may challenge Tether's dominance, as both bills require monthly audits, asset segregation, and strict reporting, which may force exchanges to delist non-compliant Stablecoins, similar to the impact of the EU's MiCA. These laws will also pave the way for the legitimization of Stablecoins, attracting institutional adoption, while erecting barriers for insufficiently transparent issuers. If passed, they will establish clear guidelines for Stablecoin issuers to ensure market stability and compliance.

This morning, FOX Business reporter Eleanor Terrett posted on social media that "to my knowledge, an updated version of the Stablecoin bill - the GENIUS Act - from Republican Senator Bill Hagerty will be released tonight (local time). As of this morning, the Senate Banking Committee still plans to mark up that bill on Thursday."

The new document expands the reciprocity provisions for cross-border payment Stablecoins, adding new reserve requirements, regulation, anti-money laundering and counter-terrorism measures, sanctions compliance, liquidity requirements, and risk management standards, aimed at facilitating international transactions and achieving interoperability with overseas US dollar-denominated payment Stablecoins.

The Stablecoin FOMO Wave is Coming, What Opportunities Lie Ahead?

Against the backdrop of Trump's clear statement that he hopes to have Stablecoin-related legislation in place by August, Japan, Thailand, and US government agencies are all making efforts to adopt Stablecoins.

On March 10, the Thai Securities and Exchange Commission has designated Stablecoins USDT and USDC as compliant cryptocurrencies. This approval means that USDT and USDC can be legally traded in Thailand, paving the way for Stablecoins to be listed on regulated trading platforms in Thailand, and laying the foundation for the widespread application of USDT and USDC in the Thai payment sector.

On the same day, the Japanese Cabinet announced the approval of a proposal to reform laws related to crypto brokers and Stablecoins. According to an announcement by the Japanese Financial Services Agency (FSA), the government has approved a Cabinet resolution to amend the Payment Services Act. The bill will allow crypto companies to operate as "intermediary businesses". This means brokers will no longer need to apply for the same type of license as crypto trading platforms and crypto wallet operators. The bill also provides more flexibility for Stablecoin issuers in the types of assets they can back their tokens with.

According to the Financial Times, some of the world's largest banks and fintech companies are eager to launch their own Stablecoins, aiming to capture the share of the cross-border payments market that they expect to be reshaped by cryptocurrencies.

Last month, Bank of America said it plans to issue its own Stablecoin, joining the ranks of established payment providers like Standard Chartered, PayPal, Revolut, and Stripe, with the goal of competing with crypto groups like Tether and Circle.

This change comes six years after regulators strongly opposed Meta's Libra Stablecoin, and has been further driven by US President Trump's active support for cryptocurrencies. "It's like the shovel business in the Stablecoin boom," said Simon Taylor, co-founder of fintech consultancy 11:FS, comparing it to FOMO.

In addition to Bank of America, other major traditional finance (TradFi) players are also preparing for the development of Stablecoins.

• Standard Chartered: Advancing a Hong Kong dollar Stablecoin project

• PayPal: Plans to expand the issuance of PYUSD by 2025

• Stripe: Acquired the Stablecoin platform Bridge for $110 million

• Revolut: Exploring the possibility of issuing Stablecoins

• Visa: Using Stablecoins for payments and global business

Previously, increases in Stablecoin supply often drove up cryptocurrency prices, as these tokens were mainly used as short-term holding tools during trading. Now, the application of Stablecoins is breaking out of the speculative realm - SpaceX is using Stablecoins for Starlink sales revenue collection in Argentina and Nigeria; ScaleAI is using them to pay overseas contractors.

The most direct trading opportunity lies in betting on which public chains major institutions will choose to issue new stablecoins. Currently, Ethereum, Base, Tron, and Solana are the main candidate public chains. On February 26, Jesse Pollak, the person in charge of the Base protocol, stated that they plan to launch stablecoins for all global currencies on Base this year.

It is clear that both the on-chain world and traditional finance are making plans around the US and the USDT stablecoin. As for the Altcoin season, perhaps it is outdated, as CryptoQuant CEO said.