Stablecoins are no longer niche; they're reshaping global finance.

Headline

• By 2030, stablecoins could power $50T in annual payments, unlocking $1T in global economic value. Fiat isn't dying, it’s going digital.

• With over $300B in circulation and daily volumes rivalling traditional cross-border flows, stablecoins are emerging as the digital evolution of fiat, not its replacement.
• USD-backed tokens like USDC and USDT are driving faster, cheaper, borderless payments, reinforcing dollar dominance while pressuring legacy banking and weaker currencies.
• Regulatory clarity (e.g., GENIUS Act) and integration with traditional rails (Visa Direct) are accelerating adoption.

Conclusion

• Stablecoins don't kill fiat; they turbocharge it, especially USD dominance, while pressuring weaker currencies and legacy banks.
• THE WINNERS? Efficient global commerce and US debt holders.
• THE LOSERS? Slow systems and inflation-prone locals.

Risks

• Risks remain from DEPEGGING EVENTS to UNINTENDED DOLLARISATION, but the shift to programmable money is inevitable.
• Regulators must tread carefully to avoid systemic blowups, but the shift to programmable, borderless money is inevitable.

Depegging Events

• A depegging event occurs when a stablecoin loses its 1:1 value relationship with the fiat currency it's supposed to track (usually the US dollar).
• This can happen due to:
• Loss of confidence in the issuer or its reserves.
• Market panic or a "run" where users rapidly redeem or sell the stablecoin.
• Poor reserve management, especially if reserves are illiquid or volatile.
• Algorithmic flaws, as seen in the collapse of TerraUSD (UST) in 2022, which was backed by a volatile crypto asset rather than cash or Treasuries.
• Why it matters:
• Depegging can trigger systemic risks.
• Suppose a major issuer, such as Tether or Circle, faces a run. In that case, they may need to sell large amounts of US Treasuries quickly, potentially spiking yields and destabilising financial markets similar to the 2008 money market crisis, but happening on-chain.

Unintended Dollarization:

• Dollarisation refers to the use of the US dollar as a substitute for a local currency, typically in countries with unstable or inflation-prone economies.
• Unintended dollarisation via stablecoins happens when:
• People in emerging markets prefer USD-backed stablecoins over their local currency.
• Stablecoins offer better stability, accessibility, and usability than local banking systems.
• Users hold and transact in stablecoins, bypassing local banks and monetary systems.
• Why it matters:
• It weakens local monetary policy, and central banks lose control over interest rates and inflation.
• It erodes the tax base. Transactions in stablecoins are more complex to track and tax than those in traditional currencies.
• It drains local bank deposits, reducing lending capacity and financial inclusion.

The Future of Fiat Money in the Age of Stablecoin Advances:

Stablecoins, digital tokens typically pegged 1:1 to fiat currencies, such as the US dollar (USD), and backed by reserves like short-term Treasuries, have experienced significant adoption by late 2025.

• With a total supply surpassing $300 billion and growing by $17 billion in the past month alone, they're no longer a crypto niche but a core part of global finance.
• Projections vary, but analysts forecast the market reaching $500–750 billion soon and potentially $2 trillion by 2028, driven by regulatory clarity, such as the US GENIUS Act, and integrations with traditional rails like Visa Direct.
• This surge is reshaping payments, but what does it mean for fiat money, the government-issued currencies, such as USD, euros, or emerging-market pesos, that underpin most economies?

Stablecoins as Fiat's Digital Upgrade, Not Replacement

• At their core, stablecoins are fiat: over 99% are USD-pegged, acting as "programmable dollars" that move instantly across borders without the friction of legacy systems like SWIFT or wire transfers. They address fiat's pain points, including delays (1–3 days), high fees from intermediaries, limited 24/7 access, and the exclusion of the unbanked, enabling near-instant, low-cost settlements for remittances, trading, and treasury operations. Daily volumes have hit $27 trillion annually, with potential to reach $250 billion daily in three years, outpacing traditional cross-border flows ($5–7 trillion daily) within a decade.
• Fiat won't vanish; stablecoins reinforce it, especially the USD. Issuers like Tether (USDT) and Circle (USDC) hold massive Treasury reserves, boosting demand for US debt and solidifying the dollar's reserve status.
• As one analyst notes, this gives the US Treasury "more control" over currency circulation, with the money supply expanding through asset-backed stablecoins rather than pure printing, thereby curbing inflation risks associated with fractional reserve lending.
• By 2030, stables could power $50 trillion in annual payments (25% of consumer transactions), unlocking $1 trillion in global economic value through faster velocity and cheaper credit via DeFi.
• Yet, they're quietly eroding physical fiat's role. Holders often keep balances in stables rather than redeeming them for cash, pulling dollars out of circulation and into invested reserves, which pressures banks' deposit models and reduces lending.
• This "parallel wallet-based ecosystem" could hollow out banking in high-adoption areas, with stables replacing checks, wires, and even credit cards for digital commerce, offering finality, no fraud alerts, and global usability.
• In emerging markets, USD stability accelerates "unintended dollarisation," draining local bank deposits, weakening monetary policy, and eroding tax bases via easier illicit flows.

Risks and the Path to a Hybrid Future

• Depegging events (like TerraUSD in 2022) highlight vulnerabilities: a "run" on issuers could spark Treasury fire sales, spiking yields and amplifying crises, akin to 2008 money market meltdowns but on-chain.
• Capital flows become fragmented, seamless for USD but costly across stable currencies, potentially privatising seigniorage (profits from money creation) to a few firms and heightening geopolitical tensions through sanctions evasion.
• Looking ahead, fiat evolves into a hybrid: digitising via stables and CBDCs for interoperability (e.g., Project Nexus linking Asia by 2027).
• Stables act as a "Trojan horse" for broader tokenisation encompassing equities, debt, and even Bitcoin integration, preparing a "next version of the USD" backed partly by crypto.
• By flipping Bitcoin's market cap and dominating savings/spending, they'll make self-custody wallets the norm, setting the stage for Bitcoin as the ultimate global money.
• At the same time, fiat persists as the stable backbone.
• In short, stablecoins don't kill fiat; they turbocharge it, especially USD dominance, while pressuring weaker currencies and legacy banks.
• The winners? Efficient global commerce and US debt holders.
• The losers? Slow systems and inflation-prone locals.
• Regulators must tread carefully to avoid systemic blowups, but the shift to programmable, borderless money is inevitable.