Stablecoins Market Cap Surges 1130% Since 2020, U.S. Legislation May Boost Supply 10-Fold

Stablecoins are poised to achieve mainstream adoption this year as the U.S. administration advances significant crypto legislation, according to a research report by Deutsche Bank. The report highlights that despite some resistance in the Senate, progress on stablecoin regulation is anticipated this year.

Stablecoins are a type of cryptocurrency designed to maintain a stable value by being pegged to another asset, such as the U.S. dollar or gold. They are integral to cryptocurrency markets and are widely used for international money transfers. The Senate's Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act proposes federal regulation for stablecoins with a market cap exceeding $10 billion, with potential state regulation if it aligns with federal rules. In contrast, the House of Representatives' STABLE Act advocates for state regulation without any conditions.

According to Deutsche Bank, the total stablecoin market cap has surged from $20 billion in 2020 to $246 billion currently. The largest stablecoin, Tether's USDT, has a market cap of around $150 billion. Analysts Marion Laboure and Camilla Siazon noted that stablecoins now power over two-thirds of crypto trading, offering unmatched speed, 24/7 access, and low-cost programmable payments. The report also emphasized that stablecoins are becoming strategic assets, with 83% pegged to the U.S. dollar and Tether ranking among the largest holders of U.S. Treasuries, thereby reinforcing dollar dominance in a fragmenting world.

According to the analyst's forecast, the passage of the GENIUS Act in the U.S. in the coming months could trigger an almost 10-fold jump in stablecoin supply. This regulatory progress is expected to pave the way for stablecoins to become a mainstream financial tool, expanding beyond crypto trading and integrating into the broader economy.