Stablecoins — the crypto world’s most boring asset — are charging ahead, and regulators seem eager to clear the path.
These tokens now account for two-thirds of the trillions of dollars’ worth of crypto transactions every year, Chainalysis says, and the rules to boost them are coming thick and fast.
Ripple, the blockchain company behind the third-biggest cryptocurrency XRP, is leading the pro-stablecoin news flow. The state of New York gave its RLUSD a nod right before it launches on 17 December.
Needless to say, any bullish moves linked to Ripple impact its $155 billion market cap, as well as crypto market sentiment globally.
And there is more. Twelve time zones away in Hong Kong, lawmakers will debate a new stablecoin bill just 12 days after it was introduced on 6 December. It could be passed early next year.
Then there is Abu Dhabi, which approved Tether’s USDT, the largest stablecoin, in under a week after bringing in a framework for these tokens.
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Old and slow EU, which was surprisingly the earliest adopter of stablecoin rules in mid-2024, also recently provided even more clarity for companies in this space.
Even DeFi projects are getting in: Ethena rolled out its stablecoin (USDtb), which keeps 90% of its reserves in BUIDL, a tokenized fund run by BlackRock, the world’s largest asset manager. That’s a bit like moving into a penthouse on Wall Street.
Why now?
Stablecoins are crypto’s strait-laced cousin.
They promise stability (being pegged to a currency like the dollar) in a world of wild swings, making them the closest thing crypto has to (securing) mainstream trust. There is a clue in the name, just saying.
This is probably why, among US policy goals for crypto supporters, getting Congress to pass rules for stablecoins has been the lowest hanging fruit.
Stablecoins enable faster payments, cross-border transactions, and remittances — and these are easier pro-business sells when it comes to pushing bills through.
The timing isn’t a coincidence either. Pro-crypto Donald Trump is weeks away from office, and stablecoin legislation could become part of his presidency’s first moves.
Trump’s nomination of Cantor Fitzgerald’s Howard Lutnick — Tether’s treasury manager — as commerce secretary? That’s a big wink, even with the shadows, to the industry.
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Bringing the big guns
Ripple, still licking its wounds from years of battle with US regulators, isn’t waiting around though.
The firm donated a record $50 million to pro-crypto political candidates during the US presidential election. On 16 December, it also added Raghuram Rajan (ex-RBI governor) and Kenneth Montgomery (ex-Boston Fed COO) to its advisory board.
Big names, bigger signals. FWIW, Rajan has previously said crypto will work if it acts as a transaction medium, and that is where stablecoins shine.
Stablecoins might look tame, but the competition isn’t. Tether controls nearly 70% of the $2.12 billion market, with Circle trailing at 20%. But with the speed at which governments are lining up, could Ripple and others like it carve out a bigger slice?
The stablecoin train is moving, and regulators are punching tickets. Might as well grab a seat now.
