Why is the United States so urgent? Stablecoins are rapidly changing the global financial landscape

The dollar's hegemony is on the verge of collapse, and the stablecoin market is rapidly expanding, becoming a new support point for the dollar and reshaping the global financial system?

According to the Chase Trading Desk, Jim Reid, the head of global macro and thematic research at Deutsche Bank, mentioned in a recent report that stablecoins are expanding at an unprecedented speed, and corporate finance executives have felt the wave of change. Reid stated:

This week, I attended a corporate finance conference on the U.S. West Coast, and all the CFOs noticed the increase in stablecoin transactions in their businesses, which is a growing market.

The so-called "stablecoin" is a type of digital asset, with over 99% of the market value of stablecoins pegged to the dollar, effectively acting as a money market fund supporting the U.S. short-term debt market, such as Tether, which has become one of the major holders of U.S. Treasury bonds.

Currently, the U.S. is accelerating the advancement of stablecoin regulatory legislation, with payments being a major use case, and regulation may open the door for broader adoption of payments. Recently, the GENIUS stablecoin bill was rejected, but Deutsche Bank expects significant progress on this bill this year.

Analysis suggests that the stablecoin market has enormous potential, and payment applications may lead to broader acceptance of crypto infrastructure. Citigroup expects that the potential market size for stablecoins will be massive in the long term, reaching USD 1.6-3.7 trillion under the basic and optimistic scenarios by 2030.

What are stablecoins? How do they work?

Stablecoins are a type of digital asset used for payments, with lower volatility than other cryptocurrencies due to their 1:1 peg to "stable" assets. Deutsche Bank's report points out that there are mainly four types of stablecoins: fiat-backed, asset-backed, crypto-backed, and algorithmic.

Currently, dollar-backed stablecoins dominate the market, with over 99% of the market value of stablecoins pegged to the dollar. These stablecoins hold over USD 120 billion in U.S. reserve assets, effectively acting as money market funds supporting the U.S. short-term debt market.

Citigroup's report further explains that stablecoins have become an important part of the cryptocurrency ecosystem: first, they serve as an entry point for decentralized finance—tracking the growth of stablecoin issuance helps determine the health and growth of the overall digital asset environment; second, stablecoins can be seen as a means of storing value without the inherent volatility of native tokens.

One use case for stablecoins is reserves, with their "safe haven" characteristics increasing their attractiveness as a store of value amid current market volatility. Another potential use case is payments and cross-border transactions, where regulatory clarity can pave the way for broader adoption of payments.

Stablecoins—A digital extension of dollar hegemony and a new source of demand for U.S. Treasuries?

The impact of stablecoins on the U.S. bond market is expanding, and Deutsche Bank's data shows that,

As of March 2025, Tether's holdings of U.S. Treasury bonds have reached USD 98.5 billion, a figure that was nearly zero in 2020, and it has now become one of the major overseas holders of U.S. Treasuries.

Citigroup also pointed out that large stablecoin providers have become bigger holders of U.S. Treasury securities:

In particular, stablecoins pegged to the U.S. dollar are becoming an increasingly important source of demand for U.S. Treasury bills. The two main reasons proposed by the U.S. Secretary of Commerce and the Secretary of the Treasury for legislation are: to increase demand for short-term Treasury securities and to strengthen the dollar's position as the global reserve currency.

Large stablecoin providers, such as Tether, have become significant holders of U.S. Treasury securities. The proposed legislation requiring stablecoin holders to hold short-term U.S. Treasury securities creates a new source of demand for U.S. short-term debt.

However, Citigroup's analysts also pointed out two mitigating factors: First, if any inflow of funds comes from existing U.S. Treasury holders, whether directly or indirectly, the demand effect will be weakened. For example, funds moving from money market funds to stablecoins would represent a substitution but would not have a net effect on overall demand. Second, while supporting short-term demand, long-term debt demand may not be affected.

Stablecoins are becoming increasingly important in the digital dollar infrastructure, Deutsche Bank stated:

The U.S. has the most to gain from increasing stablecoin demand, thereby strengthening the dollar, especially at a time when stablecoin adoption is accelerating, making it an attractive store of value amid current market volatility due to its "safe haven" characteristics.

The Citigroup report noted:

Currently, the dollar still dominates the share of foreign exchange reserves, and the dominance of dollar stablecoins not only stems from first-mover advantage but also reflects the "exorbitant privilege" of the dollar as the preferred reserve currency. The stablecoin market has enormous potential, with Citigroup estimating it could reach a scale of $1.6 to $3.7 trillion by 2030.

At the same time, Citigroup reminded that since the launch of euro stablecoins under the European MiCA legislative framework, the market value of non-dollar stablecoins has increased, which aligns with the weakening of the dollar and cracks in the "American exceptionalism" narrative. Although euro-based stablecoins currently account for only a small share, changes in this area could be a leading indicator of shifts in the dollar's status.

U.S. Stablecoin Legislation is Accelerating

The U.S. is accelerating the advancement of stablecoin regulatory legislation. According to media reports, the U.S. Senate's GENIUS bill failed to reach a full voting stage but is expected to gain bipartisan support. The House bill has passed committee and is awaiting a vote by the full chamber.

Deutsche Bank's report noted that the U.S. is currently accelerating efforts to establish a regulated, dollar-backed stablecoin ecosystem by August this year. The stablecoin bill named GENIUS was recently defeated, but significant progress is expected this year.

Citigroup's analysis shows that there are currently two stablecoin bills in the U.S. legislative process: the House's STABLE bill and the Senate's GENIUS bill. Both have similar provisions regarding consumer protection and reserves, but there are still differences that need to be coordinated and revisions that need to be made.

**Both bills focus on payment functions, so-called "payment stablecoins," and include provisions related to anti-money laundering (AML), national security, consumer protection, and reserve requirements. The reserve requirement is a 1:1 use of short-term U.S. Treasury securities and reposited secured depositsAnalysis suggests that a stable regulatory environment will pave the way for the widespread adoption of stablecoins, with the payment sector becoming an important use case for stablecoins