Opinion by: Maksym Sakharov, co-founder and group CEO of WeFi
Current market dynamics are benefiting from the tariffs set by the US government and corresponding actions from other trading nations. So far, advocates believe that these tariffs are mainly a tactic in negotiations and that their impact on businesses and consumers will remain manageable.
Market unpredictability boosts institutional engagement
Adding to the overall unpredictability are inflationary trends that could challenge the US Federal Reserve’s plans for rate cuts. Additionally, an upcoming fiscal discussion in Washington regarding the federal budget is provoking unease in the markets.
The need to address the debt ceiling is urgent, as the Treasury is currently employing “extraordinary measures” to fulfill US financial responsibilities. The timeline for when these measures may run out is uncertain, but analysts predict they could reach their limit after the first quarter.
While the administration has suggested the removal of the debt ceiling, this proposal may encounter pushback from fiscal conservatives in Congress. A recent report indicates that stablecoins are witnessing steady growth, even amid this macroeconomic uncertainty, significantly driven by the activity in Tether’s USDt (USDT) and USDC (USDC).
Dollar-pegged stablecoins lead the sector
Initially, stablecoins were an experiment — a programmable digital currency designed to facilitate entry into the crypto space and the trading of various assets. Ten years later, they have evolved into an essential component of the broader digital financial ecosystem.
The current market cap of stablecoins has reached a historical high of $226 billion and continues to grow, primarily fueled by demand in emerging markets. A recent report highlights that dollar-pegged stablecoins represent over 98% of the total stablecoin supply, with gold- and euro-backed versions holding only a minor share.
Moreover, Tether’s USDt commands over 60% of the entire market. Research suggests that the sector is set to broaden, potentially incorporating Asian currency-backed stablecoins.
Recent: US will leverage stablecoins to maintain dollar dominance — Scott Bessent
In addition, the digital asset landscape is undergoing a transformation characterized by “stablecoinization” and “dollarization.” Countries like China and Japan are unloading record amounts of US Treasurys. Saudi Arabia has terminated its 45-year petrodollar pact, and BRICS nations are increasingly opting to bypass the SWIFT network to lessen their dependence on the US dollar.
Traditionally, Bitcoin (BTC) and Ether (ETH) were the main gateways into the digital asset space. However, stablecoins have surged ahead over the past couple of years, now accounting for 35%–50% of on-chain transaction volumes.
Despite facing global regulatory challenges, emerging markets have been quick to adopt stablecoins. In Brazil, for instance, 90% of crypto transactions are conducted using stablecoins, primarily for international purchases.
A report from Visa identifies Nigeria, India, Indonesia, Turkey, and Brazil as the most active markets for stablecoins, with Argentina ranking second in holdings. Notably, six out of ten purchases in Argentina were made using stablecoins pegged to the dollar, showing a near balance between USDC and USDT.
This trend towards stablecoins in Argentina is largely influenced by soaring inflation and the need to protect against the devaluation of the Argentine peso. Individuals in nations with unstable currencies are turning to stablecoins, such as USDT, to preserve their wealth.
Deobanks and their impact in high-risk regions
Stablecoins have enabled a new wave of financial services. They have laid the groundwork for decentralized on-chain banks, known as deobanks, which utilize stablecoins as their native currency.
Deobanks democratize access to digital banking and financial services, making them available even to individuals who may not qualify under conventional criteria. They also attract users who lack trust in traditional financial institutions. Customers maintain full control of their assets through non-custodial accounts and benefit from real-time transaction transparency.
The decentralized nature of deobanks replaces middlemen with smart contracts that connect personal wallets directly to digital bank accounts. This framework reduces costs and accelerates transactions, with on-chain data transparently preserving every transaction’s details. The outcome is a financial model that is both efficient and inclusive.
The future outlook
Experts forecast that the stablecoin market cap will exceed $400 billion by 2025. Deobanks will play a critical role in this growth, utilizing stablecoins to foster economic development and enhance digital payment networks. They will create new pathways for cross-border trade and expand opportunities for financial inclusion.
In the coming years, the simultaneous rise of stablecoins and next-gen on-chain banks is anticipated to revolutionize the flow of money across borders and the processing of transactions. By incorporating blockchain technology on the back end and a stablecoin foundation, we can expect lower fees, quicker payments, and broader access to financial services. This evolution marks a departure from outdated systems and heralds a more resilient financial ecosystem.
Opinion by: Maksym Sakharov, co-founder and group CEO of WeFi.
This article is intended for informational purposes and should not be interpreted as legal or investment advice. The views expressed here are solely those of the author and do not necessarily reflect the views and opinions of any specific organization.