Stablecoins in the Global Financial System

Abstract

Stablecoins digital assets designed to maintain a stable value by referencing a fiat currency or other reserve asset have moved from a niche instrument for crypto-exchange settlement to a systemically relevant layer of global financial infrastructure. As of mid-2026, the total stablecoin market capitalization stands at roughly $310–320 billion, concentrated overwhelmingly in two U.S. dollar-referenced tokens, Tether's USDT and Circle's USDC, which together account for approximately 80–83% of supply. This thesis examines the stablecoin sector across five interlocking dimensions: (1) the market structure and competitive dynamics among major issuers, including USDT, USDC, PayPal's PYUSD, First Digital's FDUSD, Ripple's RLUSD, and a fast-growing cohort of emerging entrants such as USD1, Ethena's USDe, and Sky's USDS; (2) the regulatory architecture now taking shape in the United States (the GENIUS Act and the pending CLARITY Act), the European Union (MiCA), Singapore (the MAS stablecoin framework), and other jurisdictions; (3) the parallel and often competing rise of central bank digital currencies (CBDCs); (4) the tokenization of real-world assets (RWAs), which is extending stablecoin-adjacent infrastructure into Treasuries, credit, and money-market funds; and (5) the practical adoption of stablecoins in cross-border payments, decentralized finance (DeFi), and institutional treasury and settlement operations. The analysis draws on issuer attestations, on-chain analytics platforms (DefiLlama, rwa.xyz, Artemis), central bank and BIS publications, and law-firm and industry research to provide a fact-based, source-grounded account of where the stablecoin sector stands and where the principal points of tension—reserve transparency, monetary sovereignty, and interoperability are likely to shape its next phase of growth.