Digital Dollar Boom? Stablecoins Reach $260 Billion as Adoption Soars

Stablecoins are crypto tokens designed to hold a steady value, pegged 1:1 to a fiat currency like the US dollar. They’ve reshaped global payments over the past few years, extending the utility of digital dollars beyond crypto trading.

These dollar-pegged tokens drove record volumes last year, while regulators worldwide try to strike a balance between innovation and safety.

The Rise of Stablecoins in the New Digital Economy

The total stablecoin market cap exceeded $260 billion at the time of writing, up from about $5 billion in 2019.

Stablecoins even handled over $35 trillion in on-chain transactions in 2024, surpassing the annual volume of the traditional payment giant Visa.

Market commentators cite their appeal lies in combining the stability of traditional money with the speed of crypto.

User transfers can settle stablecoin transactions in minutes at a low cost, without the delays associated with conventional payments.

For example, many users in emerging Asian markets use stablecoins for remittances to avoid high fees and the volatility of local currencies.

Although critics have highlighted a few past failures, such as the TerraUSD collapse in 2022, today’s leading stablecoins have maintained their pegs through volatility by adhering to fully backed models.

Issuers like Tether and Circle hold reserves of cash or short-term US Treasury bonds to maintain the dollar peg.

Just to put things into perspective, Tether’s holdings of US treasuries are so substantial that it ranks among the top national creditors of the US government.

Why Stablecoin Growth Is Now Happening Beyond Ethereum

Between 2014 and 2017, stablecoin issuers such as USDC, DAI, and even USDT chose Ethereum to launch because it was the most secure smart contract network and already thriving with DeFi applications.

That decision locked in a feedback loop: every time people lent, traded, or paid with stablecoins, they paid Ethereum gas.

Today, roughly one-third of all Ethereum fees originate from stablecoin activity, and these tokens serve as the default cash within lending pools and exchanges.

However, high gas fees prompted everyday users to look for cheaper alternatives. One blockchain that has caught the attention of stablecoin issuers is Tron, which held over $80 billion in USDT at the time of writing, compared to Ethereum’s $63 billion.

On the other hand, even Solana hosts large USDC volumes and even ran a Visa pilot for stablecoin settlements.

Layer-2 networks on Ethereum are also increasingly handling stablecoin usage, offering lower fees while benefiting from Ethereum’s security.

As a result, it’s becoming clear how stablecoins have transitioned to multi-chain ecosystems and are opting for networks that are relatively faster and cheaper.

Corporate Integration Fuels Stablecoin Growth

Mainstream companies have integrated stablecoins into their core businesses. PayPal was one of the first companies to do this by releasing PYUSD, a dollar‑backed token that moves across Ethereum and Solana.

Early usage data showed that PYUSD was primarily used for international transfers, where it can significantly reduce remittance costs and times.

To drive adoption, PayPal even introduced rewards (including an annual yield for holding PYUSD) and partnered with Coinbase to integrate the stablecoin into crypto trading and DeFi platforms.

Similarly, Visa adopted stablecoins in its backend operations. The payments giant settled transactions with partners using Circle’s USDC stablecoin to boost its cross-border flows.

Some banks have piloted their dollar tokens for institutional clients, and others hold stablecoins as liquidity on crypto exchanges.

Fundstrat’s research suggests that in the near future, businesses ranging from credit card issuers to corporations may hold stablecoins as part of their treasury cash for instant payments.

In the US, lawmakers have advanced the first-ever stablecoin regulation through the GENIUS ACT to recognize the growing importance of these tokens.

Adding to the bullish sentiment, US Treasury Secretary Scott Bessent stated that a robust legal framework could significantly expand the reach of stablecoins, potentially enabling the dollar stablecoin market to surpass $2 trillion by 2028.

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