The global stablecoin market has entered a new phase of rapid expansion, reaching a total market capitalization of $220 billion—surpassing the peak recorded before the 2022 Terra collapse. This milestone was highlighted by Shen JianGuang, Vice President and Chief Economist at JD.com, during his keynote speech at the Web3 Carnival.
Shen emphasized that since the second half of 2023, stablecoins have not only regained investor confidence but have also broadened their real-world applications across payments, remittances, trade settlements, and digital asset management. The rebound signals a maturing ecosystem where blockchain-based financial tools are increasingly integrated into both decentralized and traditional financial systems.
Dominance of the US Dollar in Stablecoin Ecosystem
One of the most striking trends identified by Shen is the overwhelming dominance of dollar-backed stablecoins, which now account for approximately 95% of the total stablecoin market. This level of dollarization exceeds even the US dollar’s share in global foreign exchange reserves and international trade settlements.
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This dominance underscores the dollar’s entrenched role as a global reserve currency—and explains why policymakers, including those in the Trump administration, are actively advocating for the expansion of regulated stablecoin frameworks. A widely adopted, blockchain-based dollar could further extend US financial influence while offering faster, cheaper cross-border transactions.
Emerging Markets Driving Adoption
While developed economies explore regulatory frameworks, emerging markets are leading in real-world usage. Shen pointed to five key nations—India, Brazil, Indonesia, Nigeria, and Turkey—where demand for stablecoins is growing rapidly due to economic instability and limited access to reliable banking infrastructure.
In these regions, stablecoins serve multiple critical functions:
- Currency substitution: Citizens use stablecoins to protect savings from high inflation and local currency depreciation.
- Dollar access without bank accounts: Stablecoins offer a way to hold dollar-denominated value without needing a US bank account.
- Efficient cross-border remittances: Migrant workers can send money home faster and cheaper than through traditional channels.
- Business-to-business payments: Companies leverage stablecoins for fast, transparent international transactions.
- Consumer payments and investment: From daily purchases to yield-generating DeFi protocols, stablecoins are becoming part of everyday financial life.
These use cases illustrate how stablecoins are evolving beyond speculative assets into practical tools for financial inclusion and economic resilience.
Stablecoin Transactions Outperform Traditional Cross-Border Payments
When it comes to speed and cost, stablecoins significantly outperform legacy financial systems.
Shen cited data showing that traditional international wire transfers take an average of five business days to settle. Even modern electronic payment networks—such as SWIFT gpi or regional instant payment systems—often require over 24 hours. In contrast, blockchain-based stablecoin transfers can be completed in under one hour, with near-instant finality on high-performance networks like Solana or Binance Smart Chain.
Transaction fees tell an even more compelling story:
- According to the World Bank, the average cost of sending $200 across borders remains around 6.3%, with rates exceeding 7% in parts of Africa.
- By comparison, sending stablecoins on the Solana network costs fractions of a cent.
- On Binance’s platform, users can transfer up to $140,000 for just $1 in fees.
This dramatic reduction in friction makes stablecoins an attractive alternative for individuals and institutions alike—especially in high-volume or time-sensitive scenarios.
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Bridging Traditional Finance and Web3
The integration between traditional financial institutions and stablecoin ecosystems is accelerating. Shen noted several landmark developments:
- Standard Chartered Bank in Hong Kong has obtained regulatory approval to offer stablecoin-related services.
- Japan’s three largest banks—Mitsubishi UFJ, Sumitomo Mitsui, and Mizuho—are collaborating on “Project Pax”, a blockchain-based cross-border payment system leveraging stablecoin technology.
- Za Bank, a virtual bank based in Hong Kong, now allows retail customers to trade cryptocurrencies directly through its mobile app.
These initiatives reflect a broader trend: banks are no longer viewing blockchain as a fringe technology but as a core component of future financial infrastructure. Regulatory clarity in jurisdictions like Hong Kong and Singapore is enabling this transition, paving the way for compliant innovation.
DeFi Growth Fueled by Stablecoin Liquidity
Beyond payments, stablecoins are powering the rise of decentralized finance (DeFi). Shen observed that every major DeFi sector experienced significant growth in the past year, driven largely by increased stablecoin liquidity.
Key areas include:
- Lending and borrowing platforms, where users collateralize assets to access dollar-pegged loans.
- Decentralized exchanges (DEXs), where stablecoins provide low-slippage trading pairs.
- Yield farming and staking, where investors earn returns by supplying liquidity.
- On-chain asset management, including algorithmic strategies and index funds denominated in stable assets.
In terms of total value locked (TVL), liquidity pools and staking protocols continue to lead, followed closely by lending and trading platforms. This indicates that users are not only holding stablecoins but actively deploying them to generate income—a sign of deepening market maturity.
Frequently Asked Questions (FAQ)
Q: What caused the stablecoin market to rebound after the 2022 crash?
A: Improved regulatory oversight, greater transparency (e.g., regular audits), and stronger backing by real-world assets have restored trust. Additionally, rising demand in emerging markets and integration with traditional finance have fueled recovery.
Q: Are all stablecoins backed by US dollars?
A: While most major stablecoins like USDT and USDC are dollar-backed, some are pegged to other assets such as commodities or baskets of cryptocurrencies. However, dollar-pegged versions dominate due to their stability and widespread acceptance.
Q: Is it safe to use stablecoins for everyday transactions?
A: On reputable platforms and blockchains, yes. Stablecoins on regulated exchanges or integrated into licensed financial apps undergo strict compliance checks. As with any digital asset, users should practice security hygiene—such as using secure wallets and enabling two-factor authentication.
Q: How do stablecoins affect national monetary policies?
A: In countries with weak currencies or capital controls, widespread stablecoin adoption can challenge central bank authority by enabling dollarization outside formal channels. This has prompted many governments to explore central bank digital currencies (CBDCs) as a response.
Q: Can stablecoins replace traditional banking?
A: Not entirely—but they are becoming powerful complements. Stablecoins excel in speed, cost-efficiency, and accessibility, especially across borders. However, full replacement would require broader regulatory alignment and infrastructure development.
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Conclusion
The resurgence of the global stablecoin market to $220 billion reflects more than just a recovery—it marks a structural shift in how value moves across borders and within digital economies. With strong adoption in emerging markets, growing institutional support, and transformative advantages in cost and speed, stablecoins are no longer niche instruments but foundational elements of modern finance.
As innovation continues and regulations evolve, the line between traditional finance and blockchain-based systems will blur further—ushering in a more inclusive, efficient, and interconnected global economy.
Core Keywords: stablecoin market, dollar-backed stablecoins, emerging markets, cross-border payments, DeFi growth, blockchain finance, digital dollar, financial inclusion