{"id":837908,"date":"2025-03-31T08:12:36","date_gmt":"2025-03-31T13:12:36","guid":{"rendered":"https:\/\/newsycanuse.com\/index.php\/2025\/03\/31\/why-stablecoins-are-making-a-comeback-in-the-us\/"},"modified":"2025-03-31T08:12:36","modified_gmt":"2025-03-31T13:12:36","slug":"why-stablecoins-are-making-a-comeback-in-the-us","status":"publish","type":"post","link":"https:\/\/newsycanuse.com\/index.php\/2025\/03\/31\/why-stablecoins-are-making-a-comeback-in-the-us\/","title":{"rendered":"Why stablecoins are making a comeback in the US"},"content":{"rendered":"
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  7. Why stablecoins are making a comeback in the US<\/li>\n<\/ol>\n<\/div>\n

    The conversation and activity around stablecoins<\/a> is picking up again. What began as three subtle mentions in the first executive order<\/a> about cryptocurrency signed by President Donald Trump has rapidly evolved. The most recent development is that Trump\u2019s own crypto venture, World Liberty Financial, announced the launch of its own stablecoin, USD1<\/a>, on both Ethereum and Binance Chain, with plans to expand to more protocols.<\/p>\n

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    Meet USD1 \u2014 the stablecoin your portfolio\u2019s been waiting for.<\/p>\n

    Built for institutions and retail alike. Backed by dollars. Custodied by BitGo.
    No games. No gimmicks. Just real stability.    https:\/\/t.co\/vXPbZe0GPn<\/a><\/p>\n<\/div>\n

    \u2014 WLFI (@worldlibertyfi) March 25, 2025<\/a><\/p><\/blockquote>\n<\/div>\n<\/figure>\n

    World Liberty Financial says USD1 will be redeemable 1:1 for the U.S. dollar and backed 100% by short-term U.S. government treasuries, U.S. dollar deposits, and other cash equivalents\u2014but that\u2019s not the real story. The real story is that stablecoins are once again becoming a centerpiece in conversations from both the White House and crypto corporations.<\/p>\n

    So the real question is, what\u2019s behind this renewed interest?<\/p>\n

    Stablecoins: An old tool with new momentum<\/strong><\/p>\n

    Stablecoins are benefitting from growing tailwinds that, I\u2019d argue, are being pushed down from the White House, and in line with the White House\u2019s pro-corporation approach to the economy, it\u2019s the crypto corporations offering stablecoins that stand to benefit the most.\u00a0<\/p>\n

    As a quick refresher, stablecoins are a type of cryptocurrency designed to maintain a stable value<\/a>, usually pegged to a fiat currency like the U.S. dollar. What gives them that stability is the reserves backing them, which are typically a mix of cash, U.S. government bonds, and other low-risk assets<\/a>. The idea is that for every stablecoin in circulation, there\u2019s an equivalent value in reserve.<\/p>\n

    But here\u2019s where it gets interesting, at least for the corporates; issuing stablecoins has become a major revenue stream. Users exchange billions of dollars for those tokens when a company issues their stablecoins. Not all that money just sits in a vault. A significant portion is parked in short-term U.S. government bonds\u2014income-generating assets. And right now, those bonds pay around 4\u20135% annually.<\/p>\n

    That may not sound like much, but when you consider that stablecoin issuers often hold tens of billions in reserves. At that scale, even a modest yield means huge profits. For instance, 5% of $1 billion is $50 million in annual revenue, and the largest stablecoin issuers typically have much more than $1 billion in their reserves.<\/p>\n

    That passive income is a key reason why new issuers like Trump\u2019s World Liberty Financial<\/a> and even traditional finance giants like Fidelity<\/a> are now entering the stablecoin arena.<\/p>\n

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    JUST IN: $6 trillion asset manager Fidelity to launch crypto stablecoin.<\/p>\n

    \u2014 Watcher.Guru (@WatcherGuru) March 26, 2025<\/a><\/p><\/blockquote>\n<\/div>\n<\/figure>\n

    Retail and institutional use cases for stablecoins<\/strong><\/p>\n

    Stablecoin issuers are only half of the equation. The other half is user demand. To grow, a stablecoin needs to be used\u2014and historically, most users have been traders and investors. For them, stablecoins serve as a temporary safe haven in volatile markets, a place to park assets between trades, or as the required token to enter a specific trading pair.<\/p>\n

    But on the institutional side, there\u2019s a different shift happening.<\/p>\n

    According to a recent Coinbase (NASDAQ: COIN<\/a>) and EY report titled \u201cIncreasing Allocations in a Maturing Market: 2025 Institutional Investor Digital Assets Survey,<\/a>\u201c<\/em> of the 352 institutions surveyed, 84% said they are either already using or seriously considering stablecoins. Their main reason is that stablecoins provide them with transactional convenience and simplified foreign exchange.<\/p>\n

    In other words, stablecoins offer institutions a frictionless, borderless way to move money, which can lead to significant gains in efficiency and cost savings when you\u2019re moving millions or billions at a time.<\/p>\n

    The government\u2019s stablecoin playbook<\/strong><\/p>\n

    The U.S. government has been a key driver behind this stablecoin resurgence. For the government, it\u2019s not just about being a digital-first, innovative nation, but rather a geopolitical strategy related to U.S. finance.<\/p>\n

    At the inaugural White House Crypto Summit, Treasury Secretary Scott Bessent said it outright<\/a>: \u201cWe are going to keep the U.S. the dominant reserve currency in the world, and we\u2019re going to use stablecoins to do that.\u201d<\/p>\n

    Stablecoins allow the U.S. to digitally export the dollar\u2014making it easy for people and institutions across the globe to transact in USD, even without access to U.S. banks. The result this has is more than just stablecoins ending up in the hands of potential users; but more importantly, increased global demand for stablecoins leads to more dollars held in reserves, which translates to increased purchases of U.S. government bonds, which results in dollar dominance<\/a> and global influence.<\/p>\n

    The short end of the stick<\/strong><\/p>\n

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    For institutions, the use case is clear. But for retail investors? It gets shaky.<\/p>\n

    Most traders don\u2019t need to be in stablecoins 24\/7. It\u2019s a tool\u2014a parking lot when markets are volatile or an entry ticket into a specific trade. That\u2019s occasional and inconsistent usage, which means limited long-term demand unless new reasons to hold stablecoins emerge.\n<\/p>\n<\/div>\n

    If stablecoins will gain mass adoption on the consumer side, they need to become more than just a trading tool. They need real utility.<\/p>\n

    Imagine if users could spend stablecoins as easily as they do fiat on essentials like rent and groceries or nice-to-haves like subscriptions and takeout. That would make stablecoins much more useful than they are and could even open up a new consumer market. At that point, stablecoins start to look less like financial tools and more like modern versions of PayPal<\/a> (NASDAQ: PYPL<\/a>) or Cash App, which I believe is the kind of functionality that will be needed to drive widespread adoption.<\/p>\n

    Until that happens, it\u2019s hard not to see this as another White House-fueled movement that benefits corporations but leaves consumers right where they started.<\/p>\n

    Balancing stablecoin innovation with challenges<\/strong><\/p>\n

    Now more than ever, there\u2019s an opportunity to build in and around stablecoins<\/a>.<\/p>\n

    The momentum is there. The government\u2019s backing it. Corporations are jumping in. Institutions are exploring use cases, but the most significant challenge\u2014as usual\u2014will be solving a pain point that gets users to care and get the product into their hands.<\/p>\n

    At the end of the day, a product without paying customers will inevitably have a short life span. If stablecoins are going to move beyond this hype cycle, the headlines, and crypto Twitter threads, someone\u2019s going to have to figure out how to make people actually want to consistently use them in the real world, which we arguably have not seen happen yet.\u00a0<\/p>\n

    Watch: Blockchain is much more than digital assets<\/p>\n