Regulators’ Move Could Reshape Stablecoin Power Play

The competition among stablecoins has intensified, particularly within the USDH collateral class, as Native Markets emerges as a front-runner in market capitalization and trading activity. This development follows the recent proposal by Paxos Trust Company to reclassify its USD stablecoin, USDP, from a reserve-backed model to a full asset-backed structure, a move expected to influence the broader stablecoin landscape. As a result, market participants are closely monitoring whether such a structural change will trigger a broader shift in the USD stablecoin market, where USDH has been a rapidly growing category.

Native Markets, a new entrant in the stablecoin space, has captured a significant share of the USDH market, surpassing other major offerings in total liquidity and trading volumes. The firm’s strategy has focused on deep integration with decentralized trading platforms and enhanced redemption mechanisms, which have attracted a rapidly growing user base. In particular, its emphasis on 100% collateral backing and transparent audit practices has resonated with traders seeking alternatives to traditional stablecoins. As of the latest data, Native Markets’ USDH offering has reached a market capitalization that now exceeds USD 850 million, representing a substantial increase over the past three months.

Hyperliquid, one of the leading platforms supporting USDH, has also reported a significant uptick in the use of this stablecoin for trading and settlement. The exchange has noted that USDH accounts for more than 15% of its daily trading volume, with much of the adoption driven by institutional and semi-automated trading strategies. In response to this trend, Hyperliquid has introduced new features to improve the efficiency of USDH-based trading, including enhanced margin calculation models and faster settlement times. These updates are seen as an effort to solidify USDH’s position in the broader crypto-asset ecosystem.

The potential reclassification of USDP by Paxos has introduced a layer of uncertainty into the market. If approved by regulators, the shift from a reserve-backed to an asset-backed model could alter the competitive dynamics between USDH and other stablecoins. Currently, USDP holds a market capitalization of approximately USD 3 billion and has been used widely in both spot and derivatives markets. The proposed transition would align USDP more closely with traditional asset-backed stablecoins, potentially making it more attractive to institutional investors and reducing regulatory exposure.

Analysts suggest that the USDH market is evolving into a more structured and regulated space. With Native Markets leading the charge, there is an increasing emphasis on transparency, auditability, and liquidity depth. The growing number of USDH-pegged assets and the rise of institutional-grade stablecoin solutions indicate that the market is maturing beyond speculative trading and toward broader use cases in financial infrastructure.