Stablecoins stand out for their steady link to currency.
The stablecoin market is growing at a pace that's focusing minds in both traditional finance and crypto. As of mid-2025, the market's total value surpasses $230 billion and forecasts indicate this is only the beginning of its growth trajectory.
But what exactly are stablecoins, who is leading the market, and how are governments trying to regulate them? This guide breaks down what you need to know about stablecoins today and why they matter for the future of digital finance.
What are stablecoins?
Wallet recovery is the process of regaining access to digital assets when normal access methods have been lost, compromised, or become unavailable. For a crypto platform, the most comprehensive wallet protection has two distinct yet interconnected layers:
Stablecoins are crypto's steady cousins. Where Bitcoin and Ethereum can swing by double digits in a single day, stablecoins are built to hold their value, usually pegged one-to-one with their underlying fiat currency.
That stability makes them practical in ways other cryptocurrencies are not. You can't reliably buy a coffee with Bitcoin if the price shifts before the payment clears. Stablecoins remove that uncertainty, making digital money usable in the real world.
But stability is only part of the story. Stablecoins have become a trusted digital alternative to traditional currency. Traders use them as safe harbours, businesses as instant payment rails, and people around the world as a shield against local currency collapse. In short, they are the bridge between digital assets and the traditional financial ecosystem.
As of mid-2025, the total stablecoin market value exceeds $230 billion. - Actuarial Post
What people use stablecoins for
Stablecoins can make spending simple and frictionless. Particularly when sending money across borders, transactions are fast, inexpensive, and you don't need to rely on traditional banking infrastructure.
Everyday payments
Stablecoins can make spending simple and frictionless. Particularly when sending money across borders, transactions are fast, inexpensive, and you don't need to rely on traditional banking infrastructure.
Cryptocurrency trading
Traders lean on stablecoins as a "safe harbour", as a pool of liquidity in the digital asset ecosystem. These digital assets let traders' step into and out of positions without converting back to fiat currencies, keeping their capital stable and readily available.
Personal remittances
Stablecoins can make sending money to family or business partners abroad cheaper, faster, and more convenient than traditional remittance channels.
Decentralised finance (DeFi)
Stablecoins help power the DeFi ecosystem. They can be used as collateral for loans, to earn a return, or to access a range of financial services, all without the need for banks or conventional intermediaries.
Protection against inflation
For people living in high-inflation economies, stablecoins preserve value. By pegging to more stable currencies like the US dollar, they provide a reliable way to hold funds when local currencies are losing purchasing power.
Programmable money
Not just a simple currency, as digital assets stablecoins are programmable. They can execute smart contracts and automated financial operations, opening innovative ways for businesses and individuals to manage money more efficiently.
How do stablecoins stay stable?
Stability sounds simple, but the mechanics vary. Stablecoins such as USDC (USD Coin), are often backed one-to-one by fiat reserves - one coin, one dollar in a bank or short-term government bond – and are subject to strict regulatory oversight.
Others, like USDS (formerly DAI), are backed by crypto collateral, engineered to absorb volatility. Commodity-backed coins tie themselves to real-world assets such as gold. Then there are algorithmic coins, the largely discredited side of the stablecoin world, on their way to being comprehensively regulated against. TerraUSD’s collapse in May 2022, wiping out almost half a trillion USD from the cryptocurrency markets, proved both how dangerous “code-only” stability can be and how little the risks behind algorithmic stablecoins were understood at the time.
Stablecoins stay stable in four main ways.
- First, some, such as USDC, are backed by real money, with each coin supported by a dollar in a bank account.
- Others are backed by real-world assets, like gold, giving holders a tangible claim on a physical asset.
- A third type is crypto backed, where the coin is supported by other cryptocurrencies, typically over-collateralised to absorb volatility. USDS is a well-known example.
- Finally, some stablecoins use algorithmic mechanisms, relying on complex programs to maintain their peg. These are riskier, as demonstrated by high-profile failures like TerraUSD, and as a result are increasingly prohibited by stablecoin regulations.
The lesson is clear. Not all stablecoins are created equal.
The big players in stablecoins
A handful of issuers dominate the stablecoin market, and their influence sets the tone for the entire crypto economy. These players provide the liquidity, credibility, and scale that make stablecoins usable and their choices shape how the sector evolves:
Tether (USDT)
The most widely used stablecoin, with over $112 billion in circulation across multiple blockchains and unmatched liquidity.
USD Coin (USDC)
The world’s leading regulated digital dollar, with a market value of $33.85 billion.
Binance USD (BUSD)
A U.S. dollar–pegged stablecoin built on Ethereum, designed for seamless trading and settlement.
USDS (formerly DAI)
A decentralized stablecoin on Ethereum, governed by smart contracts that algorithmically manage supply.
TrueUSD (TUSD)
A fully collateralised stablecoin, issued by the TrustToken platform, and backed 1:1 with the U.S. dollar.
Together, these players provide liquidity that helps fuels trading, DeFi, and, increasingly, payments. The next wave of stablecoins, whether from payment service providers, retailers or big banks, will build on this foundation.
How different countries are regulating stablecoins
If 2021–2023 was the Wild West era for stablecoins, 2025 is the year they came under serious regulation. The U.S. GENIUS Act is the headline. Passed in June 2025, it created the first federal framework for “payment stablecoins.” The rules are strict: one-to-one backing with cash or Treasuries, monthly audits, and zero tolerance for interest-bearing products.
The UK takes a pragmatic stance, treating certain stablecoins as “money-like instruments” under Financial Conduct Authority (FCA) rules, as outlined in (CP25/14) Stable issuance and crypto asset custody. Europe goes further. Under the EU’s Market in Crypto-Assets Regulation (MiCA), stablecoin issuers must follow strict standards including full 1:1 reserves in liquid assets.
Elsewhere, approaches diverge. Other countries, such as the UAE, classify stablecoins as “Payment Tokens” with strict oversight. China has banned cryptocurrencies entirely, while Hong Kong regulates the issuance of stablecoins and conduct of stablecoin-related activities in the form of a comprehensive framework, known as The Stablecoins Bill.
The details differ, but the message is the same everywhere: without clear reserves and compliance, there is no future. As a result, in 2025 regulatory clarity has become the enabler of mass adoption.
The GENIUS ACT: What is it?
The GENIUS Act (Guiding and Establishing National Innovation for U.S. Stablecoins), passed by the Senate on June 17, 2025, represents a pivotal moment in U.S. cryptocurrency regulation.
At its core, it governs “payment stablecoins”: digital tokens built for everyday payments and settlements, pegged to trusted assets like the U.S. dollar.
This bipartisan legislation introduces the first comprehensive federal framework for stablecoins. It creates rigorous requirements for issuers while ensuring consumer protection and market integrity.
The GENIUS Act mandates several stringent requirements for stablecoin issuers:
- Full reserve backing: stablecoins must be 1:1 backed by fiat reserves and government securities.
- Monthly audits: issuers are required to conduct regular compliance audits and disclose reserve information.
- AML compliance: adherence to Anti-Money Laundering (AML) laws is mandatory.
- No interest payments: stablecoins are prohibited from paying interest.
- Not FDIC insured: stablecoins are explicitly not eligible for deposit insurance.
For the first time, stablecoin issuers face federal oversight. Banks, federally qualified nonbank entities, and state-approved issuers can participate, provided they meet rigorous regulatory thresholds.
The Act’s safeguards are uncompromising: full reserve backing, independent monthly audits, airtight AML standards, and a ban on paying interest. Together, these measures carve out a clear operating environment for issuers; one designed to protect consumers and bring stability to the next era of digital money.
Market size and future predictions
The stablecoin market is already substantial. Citi Institute forecasts growth to $1.6 trillion by 2030, with a bullish case of $3.7 trillion if adoption accelerates. Even under stricter regulation, estimates still sit at $300–500 billion. The US Treasury is equally confident, projecting $2 trillion by 2028, off the back of the GENIUS Act. These numbers alone reflect the growing trust, adoption and critical role of stablecoins.
Behind these projections lies momentum on multiple fronts. Corporates are testing stablecoins for faster settlement and treasury management. Payment providers see them as the backbone of cheaper, borderless transactions. And regulators, while cautious, are beginning to shape frameworks that could accelerate mainstream use.
The conclusion? Stablecoins are only just getting started. They are evolving into the connective tissue between traditional banking, decentralised finance, and global commerce. They hold the potential to streamline cross-border trade, enable programmable money at scale, and rewire how value moves around the world.
How CoinCover fits into this picture
Stablecoins may be the calm in crypto’s storm, but they still need guardrails. Redemption guarantees, AML compliance, and recovery mechanisms aren’t optional.
This is where CoinCover fits in. We help issuers meet regulatory demands with operational resilience and customer care. Even if users lose wallet access, we make sure they can reclaim their coins. That kind of assurance is exactly what regulators and users are calling for.
Contact CoinCover today to safeguard your stablecoins.
