Author: Nancy, PANews
As the stablecoin market continues to expand, the fundamentals are undergoing multi-dimensional upgrades. Currently, from the thawing cooperation between Binance and Circle, to the intensive layout of crypto giants, to the frequent financing activities and the gradual improvement of the policy environment, the liquidity and application scenarios of the stablecoin track are rapidly expanding, accelerating to become one of the core narratives of this cycle.
Binance and Circle "Reconciled", Top Giants Accelerate the Expansion of Stablecoins
On December 11, Binance officially announced a strategic partnership with USDC stablecoin issuer Circle to expand the adoption of USDC and support the development of the global digital asset and broader financial services ecosystem. According to the agreement, Binance will deeply integrate USDC into its product line, providing trading, savings and payment services to its 240 million global users, and will include USDC in the company's reserves. Circle will provide Binance with technical support, liquidity and supporting tools.
On this, Binance CEO Richard Teng said that the two parties will jointly promote stablecoin innovation and expand application scenarios. Circle CEO Jeremy Allaire also emphasized that with Binance's rapidly developing financial super-app ecosystem, USDC is expected to gain wider application.
This "century-old reconciliation" has shocked the crypto community, especially given the previous antagonism between the two companies. Reviewing last year, Binance's stablecoin BUSD, jointly issued with Paxos, was investigated by US regulators, forcing Binance to eventually withdraw from the center of the stablecoin stage. Circle was believed to be the "informant" behind this investigation, with Bloomberg citing sources saying that 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 its BUSD token issued through Paxos.
However, the current cooperation not only marks a handshake between the two major competitors, but also lays a new foundation for the larger-scale expansion of stablecoins.
In fact, top crypto companies have been increasingly active in the stablecoin field recently. For example, Binance has recently expanded the application of multiple stablecoins, including completing the integration of the stablecoin FDUSD on the Sui network and the integration of USDT on the Aptos network.
Tether has also released a number of important updates recently. For example, Tether has significantly increased the minting of USDT, with the total minting of USDT this month reaching $4 billion, and currently there are over 100 million on-chain wallets holding USDT; USDT has been recognized as a virtual asset by the Abu Dhabi Global Market. At the same time, Tether is also accelerating its expansion on multiple blockchains, including the launch of USDT on the TON chain and the introduction of Aptos network.
Circle is also accelerating its layout. Recently, Circle announced the launch of the cross-chain transfer protocol CCTP V2, with settlement time reduced from minutes to seconds, and plans to launch support for Ethereum, Base and Avalanche networks in early 2025, and will expand to more blockchains in the future; Circle also announced the launch of USDC on Aptos and plans to support Unichain and other platforms.
In addition, Ripple's stablecoin RLUSD has also announced that it has received approval from the New York Department of Financial Services, with the stablecoin initially only open to institutions.
These dynamics indicate that the stablecoin market is developing rapidly, and the accelerated layout of top crypto companies will undoubtedly drive the penetration and application of this track in the global financial system. In addition, PANews has recently reviewed the progress in the European market in the article "The EU Launches the Stablecoin War: 21 Issuers Compete, Circle Lands First, Tether Supports "Agents"".
The Total Market Cap of Stablecoins Exceeds $200 Billion, the Ecosystem Thrives under the Drive of Investment and Financing
The stablecoin market has reached a milestone. According to DeFiLlama data, as of December 12, the total market cap of stablecoins has reached a new high, exceeding $200 billion. According to asset management firm Bitwise, the stablecoin market size may double next year to reach $400 billion.
In fact, the role of stablecoins in the global financial system is becoming increasingly prominent, and the application scenarios are becoming more diversified. According to the latest research report by Standard Chartered Bank, stablecoins are gradually evolving from being used only in cryptocurrency exchanges in the early days, to becoming an important tool in the global financial field. Especially in emerging markets where traditional cross-border banking services are limited, stablecoins provide a fast and reliable digital US dollar asset transfer solution. The survey shows that in countries such as Brazil, Turkey, Nigeria, India and Indonesia, 69% of respondents use stablecoins as a currency substitute, 39% for commodity and service payments, and another 39% for cross-border payments.
Especially now, with the emergence of more innovative stablecoin projects, the ecosystem is becoming increasingly rich, and the market demand for this tool is constantly rising, and the influx of capital also provides more possibilities and imagination space for the further development of stablecoins. According to PANews statistics, at least 23 stablecoins have announced financing in the second half of this year, and these projects have cumulatively raised over $1.86 billion in investment, with Bridge's financing amount reaching as high as $1.68 billion, mainly due to its $1.1 billion acquisition by payment giant Stripe in October this year.
For example, Binance Labs recently announced an investment in the Solana stablecoin trading infrastructure project Perena, aiming to solve the fragmentation problem of the stablecoin ecosystem through its Numéraire product and reduce the capital requirements for new stablecoin issuance. Platform users can mint stablecoins, obtain tokenized real-world asset yields, and achieve customized risk-return allocation through the layered collateralized debt position system.
The stablecoin-driven financial platform KAST has also announced the completion of a $10 million seed round financing, co-led by investment giants Peak XV and HongShan, which were spun off from Sequoia's India and China investment arms. The platform can support users to hold and use stablecoins through traditional payment channels, and provide credit card services that can be used in standard merchant networks, allowing users to spend their stablecoin assets at merchants that do not support crypto payments.
Cross-border stablecoin payment company Sphere has completed a $5 million financing led by Coinbase Ventures and Kraken Ventures. The protocol can realize enterprise-to-enterprise stablecoin cross-border payments through cooperation with global fintech companies and licensed remittance service providers, and allow 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 also gradually improving, and policy developments in various regions are providing institutional guarantees for the development of stablecoins. Hong Kong's latest "Stablecoin Bill" will be submitted to the Legislative Council for first reading on December 18, proposing a regulatory system for fiat stablecoin issuers, marking a substantive step forward in stablecoin regulation; Brazil's central bank is expected to lift the ban on self-custody of stablecoins, with a more open regulatory attitude; the EU's upcoming "Crypto Asset Markets Regulation" (MiCA) is also expected to become an important milestone in global stablecoin regulation, providing more compliance guarantees for the stablecoin market; while the yet-to-be-approved "Stablecoin Clarity Act" in the US is expected to provide licensing for stablecoin issuers, and Trump's upcoming tenure is seen as accelerating the introduction of this crypto legislation.
In summary, under the active layout of top 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, thereby accelerating the transition of stablecoins from the crypto periphery to the mainstream financial market. At the same time, the gradual advancement of policies in various countries is also paving the way for the compliance and standardization of the stablecoin market.
