Why has the market value of stablecoins hit a record high despite the 6 trillion yuan evaporated from the cryptocurrency market?

Written by: shushu

Since Trump took office, the total market value of cryptocurrencies has evaporated by nearly 6 trillion yuan, but the total market value of stablecoins has increased by 1.03% in the past week, exceeding 227 billion US dollars, setting a historical high. The community can't help but wonder what factors are driving the stablecoin market value to rise against the market trend?

As the market value of stablecoins broke through historical highs, Frax Finance co-founder Sam said on Twitter that a bear market is a bull market for stablecoins. He said, "Another way to say that prices are falling is that the dollar is appreciating. In these environments, on-chain dollar issuers will gain the most, especially when favorable regulations are about to come."

Not long ago, CryptoQuant CEO Ki Young Ju also published an analysis saying that the past altcoin season capital flow cycle is outdated. "The rotation of crypto assets led by Bitcoin has basically ended, driven by regulation and institutional adoption. New capital will flow through stablecoins or widely adopted altcoins - this is completely different from the traditional altcoin season.

Against the backdrop of crypto assets and U.S. stocks fluctuating downward and both under pressure, stablecoins have risen against the trend to consolidate the hegemony of the U.S. dollar, and may have become the biggest winner in the recent market turmoil.

Loosening of supervision

On February 27, U.S. crypto-friendly Senator Cynthia Lummis said at the first hearing of the Senate Banking Digital Assets Subcommittee yesterday, "We are about to develop a bipartisan legislative framework for stablecoins and market structure."

At the first White House crypto summit on Friday night, where not much news was leaked, Trump expressed the hope to receive a stablecoin legislative bill before the August congressional recess to advance the federal government's regulatory reform of cryptocurrencies, and reiterated that he hopes the U.S. dollar will "remain dominant for a long time."

U.S. Treasury Secretary Scott Bessent promised to use digital assets to consolidate the dollar's position as a global reserve currency. He said, "We will think deeply about the stablecoin system. As President Trump has instructed, we will maintain the United States' position as the world's leading reserve currency. We will use stablecoins to achieve this."

This statement highlights the U.S. government's concerns about macroeconomic and geopolitical uncertainties, which may lead to a decline in foreign investors' demand for U.S. bonds, thereby pushing up Treasury yields. Over the past year, Japan and China, the top two holders of U.S. Treasury bonds, have continued to reduce their holdings of U.S. Treasury bonds. In order to maintain the dollar's position as a global reserve currency, it is necessary to ensure the continued demand for U.S. Treasury bonds in the international market.

By holding U.S. Treasuries as reserve assets, stablecoins can help lower Treasury yields while expanding the global circulation of the U.S. dollar. Stablecoins need to reserve sufficient U.S. dollars to meet investor redemption needs. Currently, Tether is one of the largest holders of three-month U.S. Treasury bonds.

The total market value of stablecoins has surged by $50 billion since Trump was elected; Source: DeFiLlama

Specific to the policy level, the United States has proposed two stablecoin bills-the House of Representatives' Stablecoin Transparency and Accountability Act (STABLE Act) and the Senate's United States Stablecoin Innovation Guidance and Establishment Act (GENIUS Act), which aims to regulate stablecoin issuers through licensing requirements, risk management rules, and 1:1 reserve support.

The two bills propose different frameworks, but agree on strict compliance measures. Both support private, dollar-backed stablecoins and prohibit central bank digital currencies (CBDCs).

Key differences include:

• Regulatory oversight (GENIUS allows states to regulate issuers until market cap reaches $10 billion; STABLE allows for an opt-out of federal regulation if state-level rules meet criteria)

• Reserve requirements (STABLE allows the use of Treasuries, bank deposits, and central bank reserves, while GENIUS also includes money market funds and reverse repos)

• Consumer protection (GENIUS focuses on transparency and enforcement, while STABLE requires one-to-one reserves and prohibits algorithmic stablecoins)

Tighter regulation could challenge Tether’s dominance, as both bills require monthly audits, asset segregation, and strict reporting, potentially forcing exchanges to delist non-compliant stablecoins, similar to the EU’s MiCA . These laws will also pave the way for the legalization of stablecoins, attract institutional adoption, while setting up barriers for less transparent issuers. If passed, they will establish clear guidelines for stablecoin issuers to ensure market stability and compliance.

This morning, FOX Business reporter Eleanor Terrett posted on social media, "As far as I know, an updated version of Republican Senator Bill Hagerty's stablecoin bill, the GENIUS Act, will be released tonight (local time). As of this morning, the U.S. Senate Banking Committee still plans to amend the bill on Thursday."

The new version of the document expands the reciprocal terms for overseas payment stablecoins, adds reserve requirements, supervision, anti-money laundering and counter-terrorism measures, sanctions compliance, liquidity requirements and risk management standards, and aims to promote international transactions and achieve interoperability with overseas dollar-denominated payment stablecoins.

The FOMO wave of stablecoins is coming, what opportunities are there in the future?

Against the backdrop of Trump's clear desire to clarify stablecoin-related bills by August, governments including Japan, Thailand, and the U.S. government are working hard to adopt stablecoins.

On March 10, the Thai Securities and Exchange Commission has identified stablecoins USDT and USDC as compliant cryptocurrencies. The approval means that USDT and USDC can be legally traded in Thailand, paving the way for stablecoins to be listed on regulated trading platforms in Thailand, and also laying the foundation for the widespread use of USDT and USDC in Thailand's payment sector.

On the same day, the Japanese Cabinet announced the approval of a proposal to reform laws related to crypto brokerages and stablecoins. According to an announcement from the Financial Services Agency (FSA) of Japan, the government has approved a cabinet resolution to amend the Payment Services Act. The bill will allow crypto companies to operate as "intermediary businesses." This means that brokers will no longer need to apply for the same type of license as crypto trading platforms and crypto wallet operators. The bill also provides more flexibility for stablecoin issuers in the types of assets that support their tokens.

And according to the Financial Times, some of the world's largest banks and fintech companies are eager to launch their own stablecoins, aiming to grab a share of the cross-border payment market that they expect to be reshaped by cryptocurrencies.

Last month, Bank of America expressed its intention to issue its own stablecoin, joining the ranks of established payment providers such as Standard Bank, PayPal, Revolut and Stripe, aiming to compete with the business dominated by cryptocurrency groups such as Tether and Circle.

The change came after regulators strongly opposed Meta's Libra stablecoin six years ago, and was further promoted by US President Trump's active support for cryptocurrencies. "It's like selling shovels in the stablecoin boom," said Simon Taylor, co-founder of fintech consulting firm 11:FS, who likened it to FOMO.

In addition to Bank of America, other major players in traditional finance (TradFi) are also preparing for the development of stablecoins.

• Standard Chartered Bank: Hong Kong dollar stablecoin project is being promoted

• PayPal: Plans to expand the issuance of PYUSD in 2025

• Stripe: Acquires Bridge Stablecoin Platform for US$1.1 billion

• Revolut: Explore the possibility of stablecoin issuance

• Visa: Use stablecoins for payments and global business

Previously, an increase in the supply of stablecoins often drove up cryptocurrency prices, as these tokens were mainly used as short-term holding tools between transactions. Today, the application of stablecoins is breaking through the scope of speculation - SpaceX uses stablecoins to collect proceeds from Starlink sales in Argentina and Nigeria; ScaleAI uses it to pay overseas contractors.

The most direct trading opportunity is to bet on which public chains mainstream institutions will choose to issue new stablecoins. Currently, Ethereum, Base, Tron and Solana are the main candidate public chains. On February 26, Jesse Pollak, head of the Base protocol, said that he plans to launch stablecoins for all global currencies on Base this year.

It can be seen that both the on-chain world and traditional finance are making plans around the United States and the US dollar stablecoin. As for the alt season, perhaps as the CEO of CryptoQuant said, the capital flow cycle of the past alt season is outdated.