Written by: Castle Labs
Compiled by: AididiaoJP, Foresight News
Over the past 12 months, stablecoins have gradually transitioned from a marginal role in the crypto space to a more prominent position in the broader financial markets. The data itself speaks volumes: the supply of stablecoins has more than doubled, with usage by traditional payment networks and institutional participants surging, indicating an increasing market interest in these assets. But deeper than that is a structural transformation; what was once merely a tool for crypto traders to store profits has now become a trading layer for emerging economies, a settlement tool within fintech stacks, and a strategic currency extension of U.S. monetary policy.
This report compares the usage of stablecoins from mid-2024 to mid-2025, tracking the growth of adoption rates, regional changes, and the current status of stablecoins as products and concepts.
Global trends: From liquidity tools to functional infrastructure
Growth in market capitalization and usage
The market capitalization of stablecoins rebounded from about $160 billion in mid-2024 to over $260 billion by July 2025, an increase of more than 60%, pushing the total amount of stablecoins in circulation past the peak in 2022, with liquidity also reaching new records.
On-chain transaction volumes illustrate the issue. In 2024, stablecoin settlement volumes surpassed the combined total of Visa and Mastercard, reaching $27.6 trillion. Monthly transaction volumes doubled year-on-year, rising from $1.9 trillion in February 2024 to $4.1 trillion in February 2025. A peak of $5.1 trillion was reached in December 2024, indicating that these funds are no longer confined to the crypto-native realm; in certain ecosystems, stablecoins account for over half of all transaction values.
Expansion of user base
The number of active wallets grew from about 20 million in mid-2024 to about 40 million in mid-2025. The total number of addresses holding stablecoin balances has exceeded 120 million. This growth is not only quantitative but also reflects diversity. More small businesses, freelancers, and remittance users are transferring funds through stablecoins, often without directly participating in the broader crypto market.
Institutional integration
In 2024, stablecoins emerged as not only financial tools for crypto companies but were also gradually adopted by fintech firms, asset management companies, and some corporations. The reason is simple: they provide a fast, programmable, dollar-denominated asset that can be transferred across platforms without relying on traditional banking channels. For companies operating across borders or time zones, this means improved liquidity management, faster internal transfers, and reduced settlement delays.
With interest rates remaining high for most of 2024, depositing idle cash into stablecoins like USDC has also become more attractive. Many stablecoins are backed by short-term government bonds, and while users do not directly earn yields, their reserve structure assures users that the underlying assets are of high quality and income-generating. For companies seeking reliable dollar-denominated digital alternatives with solid backing, stablecoins have become a viable option.
This year, stablecoins are further integrated into the fintech architecture. Visa extends USDC settlements to Ethereum and Solana. Stripe and PayPal introduce stablecoin payments to consumer channels. Even banks are starting to test local stablecoins, such as Standard Chartered's HKD coin, to explore faster cross-border settlements.
Tether achieved $13 billion in profit in 2024, more than twice that of BlackRock, highlighting the financial significance of the reserve model. This not only proves that stablecoin issuers support infrastructure but also indicates that they operate highly profitable businesses. This profitability also translates into sustainability, enhancing user trust and accelerating adoption across the financial sector.
The evolution of stablecoin types
Fiat-backed stablecoins dominate
The market share of fiat-backed stablecoins (fully backed by cash or short-term government bonds) has grown from about 85% in 2024 to over 90% now. Tether's (USDT) supply has increased from about $83 billion to about $150 billion. USDC has recovered from its low in 2023 (around $59 billion) and regained institutional favor.
The adoption of stablecoins like PayPal's PYUSD and Paxos' USDP has been more moderate, but real growth is concentrated in leading products. Users' preference for fully backed and transparent reserves has become a common expectation, although this also brings trade-offs regarding centralized custody and regulatory risks.
The decline of crypto-collateralized and algorithmic stablecoins
Crypto-collateralized stablecoins (like DAI) saw a slight increase in absolute numbers (around $5 billion), but their market share has declined. Protocols like Aave (GHO) and Curve Finance (crvUSD) have added hundreds of millions in circulation, but crypto-backed stablecoins have not truly broken through, nor have they collapsed.
On the other hand, algorithmic models have nearly disappeared. Following the Terra collapse, designs that were not over-collateralized lost trust, and many projects, including Frax Finance, shifted to fully fiat-backed models in 2023. Since then, no new algorithmic stablecoins have gained significant attention.
Today, fiat-backed stablecoins dominate in both use and consensus. Crypto-backed stablecoins represent a small but practical niche market. Algorithmic methods, once considered mainstream, have largely exited the market.
The rise of yield-bearing stablecoins
A new emerging category to watch in 2025 is yield-bearing stablecoins, which not only preserve value but also appreciate. Unlike traditional fiat-backed or over-collateralized models, these tokens explicitly integrate yields from real-world or on-chain strategies into their structure. Two typical examples are Ethena's USDe and Resolv's USR.
Ethena Labs' USDe adopts a delta-neutral strategy, maintaining its peg by pairing staked ETH collateral with perpetual short positions while generating synthetic yield. This yield is passed to holders through an additional token, sUSDe. This model has garnered early attention due to its composability, transparent yield mechanism, and ability to generate income without relying on centralized reserves. As of mid-2025, USDe's supply remains far below that of major stablecoins, but it is one of the few projects that gained significant adoption and maintained stability following the Terra experiment.
In contrast, Resolv Labs links yields to real-world income-bearing assets, creating a structure that is closer to tokenized government bonds but exists in the form of stablecoins. USR aims to maintain its peg while providing stable returns through partnerships with off-chain credit and structured products. This represents a more institutional approach, with adoption mainly concentrated in DeFi protocols and early lending platforms.
These models are still experimental, with adoption rates far below those of fiat-backed stablecoins. However, they represent a clear trend: users not only require stability but also wish to gain passive income. The challenges remain in maintaining transparency, anchoring stability, and ensuring regulatory clarity. If any of these aspects falter, confidence will quickly diminish.
Currently, yield-bearing stablecoins have carved out a niche. They have not replaced USDT or USDC but expanded the design space, offering capital-efficient options for users willing to accept different risk preferences. Whether they can scale without inheriting the vulnerabilities of previous algorithmic stablecoins remains to be seen. But for now, they are valued more than any attempts following the UST collapse.
Regional behavioral shifts
Emerging markets: Latin America, Africa
Motivation: Stability and gaining exposure to the dollar
In countries facing inflation and currency fluctuations, stablecoins are increasingly becoming an alternative to the digital dollar. Argentina, Venezuela, and Nigeria are examples. When local currencies depreciated in 2024, the demand for USDT surged. By 2025, holding digital dollars has become a normal behavior for individuals and merchants.
In Africa, foreign exchange shortages affect more than 70% of countries, and stablecoins have now become a bridge connecting local economies with global capital. Nigerian exchanges typically quote in USDT. When banks cannot provide US dollars, businesses use stablecoins to pay overseas suppliers.
Remittances and payments
The migration of remittance paths to stablecoins is significant. In 2024, cross-border transfers based on cryptocurrencies in Latin America grew by over 40%. By 2025, applications like Binance P2P and Airtm have become the main remittance tools for the entire community.
The average cost of sending $200 through stablecoins in sub-Saharan Africa is about 60% lower than traditional remittance channels. This is not a marginal improvement but a transformative impact and a reflection of product-market fit.
Preferred platforms and tokens
Tron has become the dominant public chain for stablecoin activity in emerging markets due to its low fees, with most niche and P2P markets using USDT on Tron. BSC chain and Solana have also gained market share, but in many regions, Tron remains the default choice.
USDC is gradually penetrating traditional financial payment channels, especially when regulatory scrutiny or institutional relationships become a concern. However, for the average user, USDT still holds a significant advantage.
Regulatory attitudes
Governments remain cautious. Brazil has introduced digital asset regulations and is exploring central bank digital currency (CBDC). South Africa is drafting guidelines for stablecoins. Most other emerging markets are still watching. While they acknowledge their utility, there are concerns about dollarization and capital flight. Currently, basic usage is tolerated, especially in the absence of alternatives.
Asia: Significant regional differences
Southeast Asia and South Asia
In Southeast Asia, the use of stablecoins is more related to access channels than inflation. In countries like the Philippines and Vietnam, remittances are the main driving force. Overseas workers send USDT or USDC back home through applications like Coins.ph or BloomX. In India, traders and freelancers use stablecoins to transfer funds between platforms, reducing slippage.
Vietnam stands out in retail crypto adoption. Singapore is taking a more institutional approach, granting stablecoin licenses and encouraging regulated issuance.
East Asia and financial centers
Hong Kong and Singapore position themselves as regulated stablecoin financial centers. The Monetary Authority of Singapore (MAS) implemented clear guidelines by the end of 2024 (reserve support, redemption terms). By 2025, USDC and regional stablecoin issuers are applying for licenses in Singapore.
Japan allows banks to issue stablecoins under a legal framework established in 2023. Currently, there are several yen-pegged stablecoins, but they remain niche. In South Korea, strict regulations have kept the use of stablecoins focused on the trading sector.
Mainland China still officially prohibits cryptocurrency-related activities, but USDT is widely used through over-the-counter channels. Reports show that a significant amount of capital flight and trade activities occur through Tether on the Tron network. This is a persistent but unofficial norm.
Developed markets: Integration rather than replacement
Usage patterns
In the U.S. and Europe, stablecoins are rarely used for everyday consumption but are embedded in the backend of fintech stacks, corporate finance, and cross-border settlements.
Companies use stablecoins to transfer funds between subsidiaries. Freelancers accept USDC as payment for international work. After the bank failures in 2023, crypto companies now rely on stablecoins instead of ACH or SWIFT for fiat transactions.
Franklin Templeton's on-chain money market fund settles in USDC. Mastercard and Western Union have launched stablecoin-based services. These integrations indicate an expanding complementarity of stablecoins in fintech rather than a complete replacement.
Regulatory trends
The EU's MiCA framework will take effect in mid-2024. By mid-2025, non-euro stablecoins will face daily cap regulations, and issuers will need to apply for licenses. The UK has also passed legislation recognizing stablecoins as digital settlement assets.
In the U.S., the GENIUS Act has just been passed, but its impact has yet to be seen. Previous enforcement actions (such as the decline of BUSD) and market behavior (focused on USDC/USDT) indicate that regulators are indirectly shaping this space, and this is changing. Stablecoins now account for over 1% of the M2 money supply, and Federal Reserve officials have begun to publicly acknowledge this.
Conclusion: From parallel assets to embedded layers
From July 2024 to July 2025, stablecoins transform from primarily crypto-native tools into an independent parallel financial system. In emerging markets, they become solutions to bypass currency collapses and expensive banking services; in developed markets, they are integrated into regulated, compliant workflows.
Market structures reflect this evolution. Fiat-backed stablecoins dominate, holding over 90% market share. Algorithmic and unsupported models, once viewed as core to 'decentralization,' have mostly disappeared. Today, the use of stablecoins is driven more by practicality and trust rather than ideology.
The regulatory environment has not fully caught up but is progressing. Institutions, banks, fintech companies, and payment giants are gradually adopting. At this stage, the question regarding stablecoins is no longer whether they will be regulated, but how they will be regulated and integrated by existing organizations, and how much value they will hold and where that value will flow.
Stablecoins are unlikely to completely replace fiat currency, but they are filling the gap in areas where traditional money fails (like non-working hours, cross-border scenarios, or economies with weak infrastructure).
Future developments will depend on ongoing practicality, clear rules, and the ability to scale returns without compromising stability or transparency. However, looking back over the past year, the trends have been quite clear. Stablecoins have found their role, and this role is more significant than most expected.
