Although I hear a lot about “stablecoins,” it seems at present that in the context of the US or world economy, they remain small in size, and in the context of usage, they remain primarily a tool for facilitating other crypto-asset transactions–rather than acting as a medium of exchange for everyday buying and selling.
The European Systemic Risk Board offers an an overview in “Crypto-assets and decentralised finance: Report on stablecoins, crypto-investment products and multifunction groups” (October 2025). A “stablecoin” is a kind of crypto-currency, run on a blockchain, which is more-or-less guaranteed to keep its value because the company issuing the stablecoins owns safe assets like US Treasury debt to provide backing for the currency.
Total issuance of stablecoins seems to be around $300 billion in early 2026. Here’s a graph showing the rise up through mid-2025. As you can see, the market has been dominated pretty much since its inception by two companies: Tether (USDT) and Circle (USDC). Essentially all of the stablecoin market is backed by US dollar assets.
Given that the value of stablecoin is, well, stable, they aren’t of much interest to speculative investors searching for high returns. Moreover, stablecoins are barely used for ordinary transactions. The ESRB writes (footnotes omitted):
Despite widespread attention, stablecoins continue to play only a limited role in the global payment landscape, although their presence is steadily expanding. According to Worldpay’s 2025 Global Payments Report, stablecoins accounted for just 0.2% of global e-commerce transaction value in 2024. While interest in initiatives such as PayPal’s USD stablecoin via Xoom is rising, stablecoin adoption as a means of payment remains limited. A 2024 BIS survey found that over half of central banks viewed stablecoin use in their jurisdictions as negligible, confined mainly to niche remittance and retail users
Given stablecoins are mostly used as a gateway to the rest of the crypto-asset universe: that is, they are used for buying and selling other crypto-assets. As the report notes: “Stablecoins are still primarily used as a bridge between fiat and crypto-asset trading and as providers of liquidity in decentralised finance and lending. They are essential to decentralised finance ecosystems such as decentralised exchanges and lending protocols, where they help users reduce their exposure to price volatility by providing a more stable settlement asset and are also used as collateral for loans. They are also key to fiat-crypto conversions on centralised platforms.”
Might something go wrong in the stablecoin world that causes problems for the rest of the financial ecosystem? The ESRB suggests some possibilities that deserve attention. For example, stablecoins are held anonymously. What happens if a company is sold for a payment in stablecoins, so that the new owner is not legally visible? What happens if the stablecoin company does not own US Treasury debt directly, but instead holds deposits in a regular bank–and what if those bank deposits are large enough that they aren’t covered by deposit insurance. For example, it turned out that Circle was holding large deposits in Silicon Valley Bank, when that bank cratered in 2023. What if stablecoins start draining deposits out of the banking system, so that banks are less able to make loans? On the other side, if stablecoins start to play a substantially larger role outside the crypto-asset world, then regulators will presumably step up and banks and other financial institutions will have a strong incentive to innovate with comparable products.
All in all, I don’t worry much about stablecoins. But then, I don’t play in the crypto sandbox, either.
