Author: Arthur Azizov, CEO of B2BinPay, CoinTelegraph; Translator: Baishuai, Jinse Finance
The stablecoin market will come to an end in 2024 and achieve extraordinary development 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 of previous years continued. Major issuers such as Tether and Circle have already tried stablecoins pegged to currencies other than the US dollar, but the adoption progress has been slow. Euro-backed stablecoins remain a relatively low-market-cap niche product, even for major entrants.
The market has shown a clear preference for Tether's USDT and Circle's USD Coin, with few willing to try new things. This hesitation may be due to the shadow of past collapses, such as the 2022 collapse of Terraform Labs and its stablecoin TerraUSD (UST). This collapse shook people's trust in algorithmic and decentralized stablecoins, although they still have supporters, their market share remains small compared to USDT and USDC.
Overall, 2024 was a very positive year for the crypto world. Bitcoin has soared to $100,000, regulatory frameworks are being developed globally, and traditional financial institutions have begun to enter the market. The total issuance of stablecoins has continued to grow, constantly setting new records. In Singapore, the value of stablecoin payments has reached $1 billion, and its use is expected to continue growing globally.
Looking to the future, here are four predictions for the stablecoin market in 2025.
Regulated Stablecoins on the Rise
In 2025, we may see more financial institutions issuing stablecoins. Tether has proven the profitability of this model, earning $5.2 billion in net profit in the first half of 2024 after depositing its reserve funds in US Treasuries.
The strategy is: 1) launch a regulated stablecoin, 2) negotiate with well-known exchanges to promote it, 3) earn stable returns by investing in legal reserves. To attract customers, exchanges have waived commissions on stablecoins. This formula is too attractive for traditional financial giants to ignore.
Banks Entering Custody Services
The full implementation of the EU Crypto Asset Markets (MiCA) regulation in January 2025 will be an important catalyst. MiCA requires stablecoin issuers to obtain licenses and provides a clear framework for financial institutions to enter the cryptocurrency market.
This regulatory clarity will open the door for banks to provide 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.
Transformation of the European Market
Currently, there are concerns about Tether's USDT stablecoin. It dominates the market, but lacks the licensing required for MiCA compliance, and there are rumors that exchanges are preparing to delist USDT for European users. If Tether fails to obtain a license, it could lose a significant market share in the region. This moment may open the door for regulated alternatives like USDC, which has already received European approval.
The MiCA framework may encourage local participants to enter the market using euro-backed stablecoins, creating more competition and potentially shifting market dynamics away from a US dollar-centric choice.
Stablecoins Pegged to Local Currencies
Another trend worth watching 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 more countries seek to digitize 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 full of hope. By 2025, the stablecoin market will not only grow, but also mature.
Clearer regulation, new entrants, and broader adoption will transform stablecoins from a niche financial instrument to a mainstream asset class. Stablecoins will provide faster, cheaper, and more inclusive financial services, and integrate with traditional finance.
2025 will mark the beginning of mass adoption of stablecoins. Prior to this, with the arrival of MiCA in Europe and the election of President Donald Trump in the US, more new players are set to enter the market. The market also anticipates new, more crypto-friendly laws.
The total market capitalization of USDT and USDC may double or even triple, and the overall market size is expected to grow. Localized stablecoins will also play an increasingly important role, potentially challenging the dominance of the US dollar and diversifying the market.
