On June 5, 2025, Circle Internet Corp. (ticker: CRCL), the issuer of the world’s second-largest stablecoin USDC, made a landmark debut on the New York Stock Exchange—marking a historic milestone as the “first stablecoin stock.” On its first trading day, CRCL opened at $69, a stunning 122.58% surge from its reference price, briefly touching $103 with a peak gain of 234.68%, triggering a temporary trading halt due to volatility. It ultimately closed at $83.23, up 168.5%, pushing its market capitalization beyond $18 billion.
This explosive market performance didn’t just spotlight Circle’s success—it reignited global interest in stablecoins, their role in modern finance, and their growing influence on monetary systems worldwide. Around the same time, major regulatory milestones unfolded: the U.S. Senate advanced the Guiding Emerging National Innovation Using Stablecoins Act (GENIUS Act) through a key procedural vote in May, while Hong Kong passed its Stablecoin Ordinance Bill, set to take effect August 1, 2025. These developments signal a turning point in financial regulation and digital asset adoption.
What Are Stablecoins? The Digital Anchor in a Volatile Market
In the fast-moving world of cryptocurrency, price swings are routine. Bitcoin can swing 10% or more in a single day, making it impractical for everyday transactions and risky for conservative investors. Enter stablecoins—digital currencies designed to maintain a stable value by being pegged to real-world assets.
Think of stablecoins as the "anchor" in the turbulent sea of crypto. Most commonly, they’re tied to fiat currencies like the U.S. dollar. For example, USDT (Tether) operates on a 1:1 reserve model—each token is backed by one dollar held in reserve. This makes it function like digital cash, offering stability without sacrificing the speed and accessibility of blockchain technology.
Beyond fiat-backed versions, there are also commodity-backed stablecoins (pegged to gold or other assets) and crypto-collateralized stablecoins like DAI, which use over-collateralized crypto assets for backing. There are even algorithmic models like FRAX that rely on smart contracts and supply adjustments—but these carry higher risk, as seen in the collapse of TerraUSD (UST) in 2022.
Key Roles of Stablecoins in Modern Finance
- Fast, Low-Cost Cross-Border Payments: Traditional international wire transfers can take days and involve high fees. Stablecoins enable near-instant, 24/7 global transfers with minimal costs.
- Safe Haven During Market Volatility: When crypto markets plunge, traders often convert volatile holdings into stablecoins to preserve value.
- Core Infrastructure for DeFi: In decentralized finance (DeFi), stablecoins power lending, borrowing, yield farming, and derivatives trading—providing reliable pricing and liquidity.
USDT vs USDC: Dominating 88% of the Stablecoin Market
As of May 2025, the total market capitalization of stablecoins surpassed $250 billion, with two major players—USDT and USDC—controlling over 88% of the market share.
USDT: The Liquidity Leader
Launched by Tether Limited, USDT has maintained dominance thanks to early entry and deep integration across exchanges. Its reserves consist of approximately 66% U.S. Treasury bonds, along with cash and short-term deposits. Despite scrutiny over transparency in earlier years, it rebounded strongly after the 2022 market downturn and reached over $130 billion in market cap by late 2024.
USDC: Built on Compliance and Trust
Issued by Circle, USDC differentiates itself through strict adherence to regulatory standards. Its reserves are limited to cash and short-term U.S. Treasuries, ensuring full 1:1 backing with transparent monthly attestations. Although it suffered a major setback in March 2023 when Silicon Valley Bank—a key custodian—collapsed, causing its market cap to dip to around $25 billion, it has since recovered to approximately **$60 billion, representing about 26%** of the global stablecoin market.
Circle’s business model is unique: it generates revenue through interest earned on reserve assets, not transaction fees. In 2024, 99% of its $1.676 billion revenue came from this “interest carry” strategy. With U.S. interest rates remaining elevated, USDC’s reserves yielded over **5% annually**, generating nearly **$210 million in Q1 2025 alone**.
👉 See how institutional investors are leveraging stablecoin yields—learn more now.
The Dollar Dominance: How 95% of Stablecoins Reinforce U.S. Financial Power
Over 95% of all stablecoins are pegged to the U.S. dollar, making them powerful tools for extending dollar influence far beyond traditional banking systems.
Every time someone buys USDT or USDC, they indirectly increase demand for U.S. dollars—and often, U.S. Treasuries used as reserves. Since only dollars can purchase Treasuries, this creates a self-reinforcing cycle: more stablecoin issuance → more dollar demand → more Treasury purchases → stronger dollar dominance.
According to Standard Chartered, if the GENIUS Act becomes law, stablecoin supply could grow tenfold within four years, absorbing up to $400 billion in U.S. debt annually. Stablecoin trading volume could rise from ~1% to 10% of daily forex spot market volume, significantly amplifying the dollar’s reach in global commerce.
Moreover, new U.S. regulations mandate that only licensed U.S.-based entities can issue regulated payment stablecoins. Foreign issuers must comply with stringent oversight requirements—effectively bringing global stablecoin operations under American jurisdiction.
This regulatory tightening allows the U.S. to exert greater control over digital money flows—essentially placing the reins of this emerging financial layer firmly in Washington’s hands.
Implications for China: Challenges and Opportunities
The rapid evolution of stablecoins presents both risks and opportunities for China’s financial landscape.
Regulatory and Monetary Challenges
Stablecoins pose a potential threat to capital controls and monetary sovereignty due to their:
- Cross-border nature
- Relative anonymity
- Decentralized transaction rails
If widely adopted domestically or through offshore gateways, they could enable capital flight or circumvention of foreign exchange rules—posing systemic risks to financial stability.
Additionally, the efficiency of stablecoin-based cross-border payments may erode China’s influence in global payment infrastructure, particularly as alternatives to systems like CIPS gain traction.
Strengthening Digital Yuan Amid Global Shifts
Conversely, the rise of U.S.-aligned stablecoins accelerates China’s push toward broader adoption of the digital yuan (e-CNY). Backed by sovereign credit and designed with controllable anonymity, e-CNY offers a secure, state-regulated alternative capable of countering private stablecoin dominance.
It also supports programmable money features—ideal for targeted fiscal stimulus, supply chain finance, and smart contracts—giving China a strategic edge in next-generation monetary infrastructure.
Hong Kong’s Regulatory Blueprint
The passage of Hong Kong’s Stablecoin Ordinance Bill marks a critical step in establishing a clear regulatory framework for digital assets in the region.
Key provisions include:
- Mandatory licensing for issuers
- Full reserve requirements with regular audits
- Restrictions on retail sales to licensed institutions only
- Strict advertising rules to prevent consumer deception
By creating a safe and compliant environment, Hong Kong aims to attract global fintech innovators and position itself as a leading hub for digital asset innovation—offering lessons for mainland regulators navigating the balance between openness and control.
👉 Stay ahead of regulatory shifts shaping the future of money—find out what’s next.
Frequently Asked Questions (FAQ)
Q: What is a stablecoin?
A: A stablecoin is a type of cryptocurrency designed to maintain a stable value by being pegged to an underlying asset, typically the U.S. dollar or other fiat currencies.
Q: Why did Circle's stock surge so dramatically on its first day?
A: Investor confidence was driven by strong fundamentals—Circle’s proven revenue model via reserve interest income—and growing institutional interest in regulated digital asset firms.
Q: Are stablecoins safe?
A: It depends on transparency and backing. Regulated stablecoins like USDC undergo regular audits and hold high-quality reserves; others may lack full disclosure or carry counterparty risk.
Q: Can stablecoins replace traditional banking?
A: Not fully yet—but they’re transforming specific areas like cross-border payments and DeFi lending by offering faster settlement and lower costs.
Q: How do stablecoins affect the U.S. dollar's global status?
A: By increasing global demand for dollars and U.S. Treasuries, stablecoins reinforce dollar dominance in international finance.
Q: Is China developing its own response to private stablecoins?
A: Yes—the digital yuan (e-CNY) is China’s central bank digital currency (CBDC), designed to modernize payments and safeguard monetary sovereignty against foreign digital currencies.
Core Keywords: stablecoin, USDC, USDT, Circle IPO, digital currency, DeFi, regulation, digital yuan