Stablecoins 101: Uncertain growth but the stakes are high
The rapid expansion of stablecoins could signal a noticeable shift in the financial landscape, contingent upon regulatory acceptance and interoperability advancements. Per the full note source, stablecoins reached nearly $300 billion in market capitalization by the end of 2025, yet their future remains uncertain as they grapple with competition from central bank digital currencies. This commentary highlights a critical moment for stablecoins, suggesting that meaningful adoption could reshape financial stability and monetary policy across global markets, particularly for emerging economies. With no immediate market events to shift focus, traders should monitor regulatory developments and their potential impact on stablecoin viability.
What the desk is arguing
The evolving role of stablecoins is positioned as a pivotal change for broader financial systems amidst uncertain growth trajectories. Per the full note source, with significant concern from regulators alongside expansive growth in 2025, the state of stablecoins hinges on acceptance as a legitimate payment method.
Currently, stablecoins constitute about 7% of the overall crypto market—a noteworthy size that underpins their potential influence. The research highlights that growth beyond the existing crypto ecosystem appears feasible yet complicated, requiring a competitive edge against traditional payment infrastructures.
Where it sits in our coverage
The desk currently sees volatility in stablecoin adoption affecting the FX market, but we lack a consensus target or specific forecasts on correlated currency pairs at this time.
How other firms see it
Several firms hold aligned views on the potential for stablecoins impacting payments and monetary policy, while a few others express skepticism. jpmorgan envisions a stablecoin landscape that will grow solidly, contrasting with bofa, which foresees challenges that may limit their adoption.
In terms of market dynamics, closely watch developments in USD/EUR as shifting regulatory frameworks may impact sentiment surrounding stablecoins and traditional currencies alike.
What the calendar says
No significant events are scheduled in the upcoming calendar to influence this discourse directly.
01Stablecoins achieved approximately $300 billion in market cap by end-2025.
02Regulatory frameworks are essential for stablecoin growth and acceptance.
03Uncertainty remains regarding stablecoins' comparative advantages over CBDCs and other payment methods.
04Potential adoption of stablecoins could have far-reaching implications on financial stability and monetary policy.
Market implications
Traders should remain vigilant for regulatory updates, as these could redefine the approach towards stablecoins in the financial sector. A notable resistance level to watch is $1 in pegged stablecoins, significantly influencing related currency positioning.
Risks to this view
Should regulatory bodies impose stringent barriers or curtail favorable conditions for stablecoin growth, it could lead to a steep decline in their adoption and thus affect related currency markets negatively.
Articles Stablecoins 101: Uncertain growth but the stakes are high Yesterday, 10:44 United States Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Stablecoins saw significant growth in 2025, drawing attention from issuers and regulators alike. Still, their long-term prospects remain uncertain. In the first article of our new series, we explore what stablecoins are, what could drive adoption, and why their future matters Marine Leleux Despite a sharp expansion, stablecoins now account for only about 7% of the broader crypto market Executive summary Stablecoins have seen significant growth over the past few years, reaching nearly US$300bn in market capitalisation at the end of 2025.
This rapid expansion has come with heightened attention from both regulators and potential issuers. However, the future of the crypto asset remains uncertain as further growth depends on whether it can develop beyond the crypto-landscape and expand into the broader payment world. In our view, part of the path to becoming a broadly adopted instrument depends on the presence of a regulatory framework and interoperability with existing payment systems.
However, estimating the future growth of stablecoins is difficult, as it requires predicting their relative attractiveness compared with alternative payment systems such as central bank digital currencies and tokenised deposits in a rapidly evolving market. While the jury is still out on how widely stablecoins could be adopted, it is important to consider a scenario in which uptake becomes significant, as this could have serious implications for financial stability, the banking sector, emerging markets, and monetary policy. Despite the growing attention, many questions remain about what stablecoins are, how they work, and what role they could ultimately play in the financial system.
In this piece, we explain the fundamentals of stablecoins, review recent market and regulatory developments, and explore the factors that could shape their future adoption. While the market is evolving quickly, their long-term prospects remain highly uncertain. Their eventual role in payments and savings will depend not only on regulation but also on whether they can compete with existing and emerging forms of digital money.
In future publications, we will examine the implications of broader stablecoin adoption in more detail. What are stablecoins? Stablecoins are crypto assets issued by private institutions that promise a stable nominal value in a given currency, commodity or pool of assets.
They are not issued or backed by a government or central authority but rather by a private institution and secured by segregated reserves. The crypto asset is issued on a Distributed Ledger Technology (DLT) (i.e. a blockchain) with three existing types of pegging mechanisms: Fiat-collateralised stablecoins: backed 1:1 by reserves of cash or liquid assets. These are the most common and utilised type of stablecoin, currently representing over 90% of all stablecoins.
We will focus on these in this piece. Crypto-collateralised stablecoins: backed by over-collateralised crypto assets. The issuance of these stablecoins tends to be restricted by regulations such as the EU’s Markets in Crypto-Assets Regulation (MiCAR).
Algorithmic stablecoins: not backed by real assets, but the peg to the chosen currency is maintained by a dynamic adjustment of the token’s supply using algorithms or “smart contracts”. Following the crash of Terra project in 2022, algorithmic stablecoins now represent only a fraction of all stablecoins. The total market capitalisation of stablecoins surpasses US$300bn globally, 99% of which is USD-pegged tokens.
While still dwarfed by bank deposits, the rapid growth of the sector over the past five years (up by $250bn) has drawn considerable attention. Despite the sharp expansion, though, stablecoins now account for only about 7% of the broader crypto market, a decline from their 2022 peak, as the market capitalisation of other cryptocurrencies has grown even faster. Selected stablecoins' market capitalisation over time & share of all cryptocurrencies Source: ING Research, IMF / USDT = Tether, USDC = Circle, USDS = Sky Protocol "> Source: ING Research, IMF / USDT = Tether, USDC = Circle, USDS = Sky Protocol Euro-pegged stablecoins still only represent a fraction of all stablecoins in use, but their market capitalisation grew from €50m in early 2024 to nearly €400m at the end of 2025.
Euro stablecoins remain in their infancy, accounting for only about 0.3% of the global stablecoin market despite recent progress. Euro-pegged stablecoins remain at a nascent stage Source: ING Research, ECB / EURC = Euro Circle, EURCV = Coinvertible, EURI = Eurite "> Source: ING Research, ECB / EURC = Euro Circle, EURCV = Coinvertible, EURI = Eurite Available data shows that the use of stablecoins remains limited in the larger frame of global payments. Yet the sector’s very rapid development over the past years suggests that could change.
The new digital currency is forecasted to grow exponentially, reaching anywhere between $900bn and $4.2tr by 2030. The wide variation in projections underscores just how hard it is to forecast the trajectory of stablecoins over the coming years. Indeed, stablecoins’ growth will depend on several factors: the regulation in place, interoperability with existing payment systems and, importantly, their use cases and relative attractiveness versus other payment systems (new or existing) .
The next section delves into other technologies that could influence the growth (or lack thereof) of stablecoins. How do stablecoins differ from other digital & crypto currencies? Unbacked cryptocurrencies Stablecoins are a form of crypto asset, but they differ from other cryptocurrencies by holding segregated reserves designed to maintain a one‑to‑one value with a chosen reference currency.
This is not the case for “real” cryptocurrencies that are also issued and transferred using Distributed Ledger Technology (DLT) but not backed by liquid assets. These unbacked cryptocurrencies are, therefore, much more volatile and used mainly for investment and speculative purposes. Taken together, cryptocurrencies’ market capitalisation reached nearly $4500bn at the end of 2025, about three times the level in early 2024.
Selected cryptocurrencies market capitalisation over time Source: ING Research, IMF "> Source: ING Research, IMF Beyond stablecoins and unbacked cryptocurrencies, a new wave of digital currencies is gaining traction among both prospective issuers and regulators. Tokenised assets Tokenised assets are digital representations of real‑world assets on a distributed ledger infrastructure. A wide range of underlying assets can be tokenised, including securities, bank deposits, and real estate.
Tokenisation is increasingly being explored for bank deposits, where the deposit itself is represented, stored, and issued on a DLT. Each token corresponds to a direct claim on a regulated commercial bank and remains on that bank’s balance sheet. Unlike stablecoins, tokenised deposits do not circulate as bearer instruments but are tied to identified account holders.
The usage of tokenised deposits currently remains limited and mostly experimental. However, tokenised deposits can modernise payment and settlement infrastructures, as well as intragroup liquidity management. They promise faster settlement (near-instant, in fact), 24/7 transactions, programmability, and lower operational frictions (reducing reliance on multiple intermediaries).
Tokenised deposits also offer regulatory advantages, as they remain fully within the existing supervisory framework; the underlying assets stay on commercial banks’ balance sheets, preserving the same oversight and prudential standards applied to traditional deposits. Central Bank Digital Currencies Central Bank Digital Currencies (CBDCs) are digital forms of money that allow users to pay each other using a direct claim on the central bank. In other words, it aims to reinvent central bank money (cash and coins) in a digital form.
CBDCs are often compared and opposed to stablecoins, but the main difference is their direct claim to the central bank. They are issued and maintained by the central authority, often but not systematically using DLTs. CBDCs can be built for retail or wholesale use (for interbank settlements and large-value transfers).
Only a few CBDCs are currently in use in the world (Bahamas, Jamaica, Nigeria and China with a large-scale pilot). But over 100 countries have projects to develop their own digital currency. This includes the EU, which is currently developing its own retail CBDC (the digital euro) and aiming for a 2029 launch.
Read more on this in our piece The digital euro is making progress, European banks should pay attention . In addition to the digital euro, the EU is looking at developing a wholesale DLT settlement strategy. The near-term project ‘Pontes’ will leverage existing T2 infrastructure and provide immediate central bank money settlement.
It’s expected to be launched in 3Q 2026. The European Central Bank also plans a full DLT-based wholesale CBDC ecosystem under the ‘Appia’ initiative, with a blueprint expected in 2028. To summarise the four digital currencies discussed, the table below highlights the key differences across their main attributes.
Currencies comparison table Source: ING Research "> Source: ING Research Both stablecoins and CBDCs aim to create a more digital and efficient means of payment, yet they are often portrayed as competing alternatives. Despite this, the two forms of digital money differ significantly. Their key differences can be illustrated through their issuance models, shown in the flowchart below.
CBDCs versus stablecoins issuance flow Source: ING Research *examples of safe asset custodians, can vary depending on the regulation in place "> Source: ING Research *examples of safe asset custodians, can vary depending on the regulation in place The approach to stablecoins and CBDCs varies across the globe, with notable differences between the US and Europe. The transatlantic divide became increasingly apparent in the summer of 2025, when the US moved to support dollar-backed stablecoins while prohibiting the issuance of a CBDC. Europe has taken a different approach, arguing that a CBDC, the digital euro, would enhance regulatory oversight through issuance and supervision by the European Central Bank.
Given the starkly different political approaches across jurisdictions, stablecoins are likely to evolve as primarily domestic or regional instruments, a dynamic that could shape and, potentially, constrain their overall growth potential. For stablecoins to become systemically important, their use needs to extend beyond the crypto ecosystem into the broader, global, payments world. However, political positions are already signalling resistance to a global (dollar‑pegged) stablecoin, with policymakers instead encouraging the development of multiple domestic stablecoins denominated in local currencies.
The absence of regulatory harmonisation reinforces this trend. Stablecoin issuers must adapt to each jurisdiction’s rules, limiting cross‑border scalability and undermining the emergence of a single dominant global stablecoin. The next section outlines the regulatory divergences across the US, EU, and UK.
Large regulatory differences and crucial remuneration uncertainty Currently, 12 countries have stablecoin regulations in force, and another 10 have proposed texts that are not yet approved. The strongest stance against the issuance of stablecoins comes from China, where they’re banned. This partly stems from the government’s push for its CBDC; stablecoins are therefore viewed as direct competition.
The main laws are in place in the trading hubs, while other markets still lack specific stablecoin and crypto asset regulations. Despite recent developments at the national or regional level, there’s an absence of international harmonisation and coordination on the topic. Distribution of current stablecoin regulations worldwide Source: ING Research, Visual capitalist "> Source: ING Research, Visual capitalist Because of the lack of international harmonisation on stablecoin oversight, existing regulatory frameworks diverge in several ways.
The most important difference concerns the management of the safe assets. Indeed, issuers face various types and levels of restrictions for the segregated reserves. This could influence stablecoins’ potential impact on the financial system.
Under US regulation (GENIUS Act), issuers must hold at least $1 of permitted reserves for every $1 of stablecoins issued. Permitted reserves include (but are not exclusively) cash, deposits held at commercial banks, short-dated treasury bills and other similar government-issued assets approved by regulators. The absence of specific limits or thresholds on each of these options gives USD-stablecoin issuers a relatively large degree of freedom to allocate their reserves.
This isn’t replicated in the European legislation. MiCAR sets stricter requirements for E-Money institute issuers. These institutions (if systemic) are required to hold at least 60% of the safe assets as commercial banks’ deposits (30% if non-systemic issuers).
They’re allowed to hold 40% of their reserves in liquid government bonds (70% if non-systemic issuers). While the UK is still drafting its final stablecoin regulatory framework, the latest proposal includes restrictions on reserve investments. For systemic issuers, the Bank of England proposes prohibiting the use of commercial bank deposits and requiring that at least 30% of backing assets be held as non‑remunerated central bank deposits.
The remaining 70% could be invested in short‑term government debt. The central bank argues that allowing commercial bank deposits as backing could introduce financial, operational, and contagion risks that could amplify a stress across the sector. Additionally, the UK is the first country to propose a temporary issuance guardrail for systemic issuers, limiting the amount of stablecoins issued to £40bn per issuer for an unspecified temporary period.
While myriad other divergences exist, we also note one convergence between the US, EU and UK regulatory frameworks: the ban on remuneration distribution. All three regimes prohibit stablecoin issuers from paying interest to holders. In the US, where broader crypto market legislation is still under negotiation, this restriction is heavily debated and could ultimately be revised.
Interest payments by stablecoin issuers remain prohibited in most jurisdictions. This restriction is central to the regulatory architecture, as it directly shapes stablecoins' appeal as a store of value and influences both adoption dynamics and its potential footprint in the broader financial system. The table below summarises the main differences between the three regulatory frameworks.
Read more on the various regulatory frameworks in the footnotes. Summary of the US, EU and UK stablecoins regulatory frameworks 1 US has three license levels: for a) bank and b) non-banks at federal level, and c) one at state level for smaller institutions. 2 Proposed UK-regime based on June 2026 proposal in Bank of England consultation Source: ING Research, Fed, European Commission, BoE "> 1 US has three license levels: for a) bank and b) non-banks at federal level, and c) one at state level for smaller institutions. 2 Proposed UK-regime based on June 2026 proposal in Bank of England consultation Source: ING Research, Fed, European Commission, BoE ...driving the key uncertainty on stablecoins' uptake Stablecoins’ rapid growth over the past few years, in association with the lack of regulation, has raised concern for central banks across the world. Depending on future growth and use cases, stablecoins could have a significant impact on financial stability.
For this to materialise, stablecoin use and adoption would have to go beyond the niche crypto-ecosystem and extend to the payment landscape. While stablecoins have grown significantly over the years, they are not currently “broadly adopted”. Currently, there’s no set threshold determining what would constitute this broad adoption.
Furthermore, the development of the crypto asset over the next few years remains unclear. In our view, the adoption uptake would depend on its use for two things: Payments As a store of value Starting with the use of stablecoins in payments, there are three main variables. The first two factors are the presence of a regulatory framework and the degree of interoperability between stablecoins and existing payment systems.
Mapping these variables produces a quadrant that illustrates four potential development paths for stablecoins. Potential development of stablecoins in retail payments Source: ING Research "> Source: ING Research A scenario with both a clear regulatory framework and full integration of stablecoins into existing payment systems would provide fertile ground for meaningful adoption in payments. However, the extent of such uptake depends on the third variable: the attractiveness of other payment systems (new and existing ones).
The existence and development of alternatives such as tokenised deposits and central bank digital currencies might limit the relative attractiveness of stablecoins. Even though payment systems in Europe remain relatively cheap and fast, that experience is far from universal internationally. For regions where payments are costly and slow, introducing new technologies such as tokenisation into existing systems could allow them to rapidly close the gap with the advantages stablecoins offer, and potentially emerge as direct competitors to the crypto asset.
There is also a potential political push toward adopting central bank digital currencies, a dynamic relevant not only for jurisdictions with high payment costs but for the EU as well. The digital euro has become a central topic in the ‘strategic payment autonomy’ discussion and could directly compete with stablecoins for day-to-day payment use. When it comes to the use of stablecoins as a store of value, a significant uptake would depend on two points: Whether direct remuneration by stablecoin issuers is allowed.
The current ban on direct remuneration in major jurisdictions does little to support the use of stablecoins as deposit‑like instruments, except in countries where real interest rates are negative. However, we can’t exclude regulatory changes in coming years, especially as the topic is currently under discussion in the US with the upcoming Clarity Act. Read more on this in our regulatory footnotes below.
The interest rate level paid on alternative deposit accounts (such as traditional bank deposits), as stablecoins could become more of a competitor to traditional deposit accounts in an environment where interest rates are zero or close to zero (which has been the case in the EU in recent years and is still the case in the US). Only if, and with the right combination of these factors, could we foresee the adoption of stablecoins growing significantly to become broadly adopted. Yet, at present, it remains difficult to estimate the direction the crypto asset will follow in the years ahead.
Potential implications of stablecoins Although stablecoins are not yet widely adopted and their future trajectory remains hard to pin down, our forthcoming articles will explore a scenario in which they scale enough to become a meaningful payment system. We see this as a necessary exercise: broad stablecoin adoption could carry significant and far‑reaching implications for the financial system – spanning the banking sector, emerging market stability,