according to the website - By Altcoin Buzz
Their market value has reached new record highs, exceeding 300 billion dollars, and covered about 8% of the entire cryptocurrency market. This rapid growth has caused both enthusiasm and concerns.
Investors view stablecoins as useful tools for trading, payments, and quick money transfers, but regulators are worried that their rapid growth and strengthening ties to traditional finance could increase financial risks. As the market expands, the question arises: can stablecoins scale safely, or could their weaknesses lead to problems?
Why are stablecoins more important than ever?
Stablecoins are tokens designed to maintain a stable price, usually pegged to a major currency, such as the US dollar. This simple idea has made them an integral part of the crypto world. Today, about 80% of trading on major crypto platforms involves stablecoins, as traders use them to open and close positions without having to go to the bank for money each time. Two names dominate this space.
The ECB has stated that stablecoins could destabilize the financial system by diverting retail deposits from eurozone banks. The market capitalization of stablecoins has exceeded $280 billion. A rush to stablecoins could lead to a sell-off of reserve assets, which would hit the markets for US Treasury bonds and...
The value of Tether is $184 billion, while USD Coin is $75 billion. Together, they represent almost the entire supply of stablecoins. A key trend driving growth is the new clarity in regulation. Last year, the European Union launched the MiCAR regulatory framework, imposing clear obligations on issuers, and the United States recently passed the GENIUS Act. Hong Kong has also introduced corresponding regulations. This wave of regulation has helped investors feel more comfortable, increasing demand worldwide.
Although people often mention cross-border payments and inflation protection as use cases for stablecoins, the real data tells a different story. Only a small fraction of the activity comes from ordinary users. One study shows that less than 1% of stablecoin volume is related to retail transfers. So far, stablecoins remain tools primarily created for traders, rather than the general public.
Rapid growth is accompanied by challenges. A stablecoin must always be available for redemption at the announced price. If users lose trust, they may all rush to withdraw funds simultaneously, leading to a drain on assets and a collapse in the coin's price. This has already happened in cryptocurrencies and can quickly shake the markets. The biggest risk is that leading stablecoins hold vast assets in traditional financial markets.
Tether and USDC are among the largest purchasers of US Treasury bills. If either of them faces a withdrawal of funds, they may have to quickly sell these assets, which could harm broader markets. Some analysts even predict that by 2028, the volume of stablecoins could reach two trillion dollars, raising the stakes.
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This information is being retransmitted by us from various open sources for the purpose of informing, without claims of originality, and does not carry the nature of financial recommendations !!!
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