From minted coins and paper notes to credit cards and electronic transfers, money’s development has been a march towards greater convenience, efficiency and safety. Stablecoin issuers now view themselves as the latest stage in this journey.
With stringent Know Your Customer (KYC), Anti-Money Laundering (AML), credit history, and solvency requirements, the modern financial system excludes many individuals and small-and-medium enterprises (SMEs) in the developing world from participating in the global, dollar-based economy.
According to Mento Labs, a decentralized stablecoin platform, “nearly 2.5 billion people (a credit gap of $4.9tn)…are excluded from formal financial services.” From Mexican farmers lacking credit histories to cash-strapped Indonesian SMEs, developing consumers’ demand for capital has been walled in by regulatory and technical barriers.
Despite stablecoin’s origin as a liquidity tool for specialized crypto traders, the technology is now billed as an inclusive upgrade to a traditionally Western-dominated financial system. This focus on efficiency and ease-of-access is reflected in many current issuers’ value propositions.
The current stablecoin market
Early stablecoins, like BitUSD, NuBits, and TerraUSD, used algorithms and crypto collateral to prop their peg to the dollar. These pillars collapsed in market downturns, prompting most issuers to shut down, their tokens worth only a small fraction of real dollars.
Tether distinguished itself by backing its USDT stablecoin with fiat securities, such as cash and Treasuries, opening the door for the tokens to act like digital dollars instead of a risk asset. Particularly in international transfers, this newfound predictability has fueled significant cost reductions; wire transfers costs of sending USD have long hovered around $44 per transaction. With the advent of USDC (Circle Internet Financial’s stablecoin), on Ethereum, that cost dropped to $12. More recently, on faster and cheaper Layer 2 blockchains like Base, this cost has fallen to below one cent.
Seizing on this opportunity, investors poured capital into the industry: In 2021, the market cap of the top three stablecoins was $54.66 billion. As of 2025, those top three became ten, and total market cap had quadrupled to $221 billion. Notably, traditional finance heavyweights like Paypal and Blackrock entered the industry, signaling broader institutional adoption.
In this still-growing stage of the industry, issuers are adopting a variety of strategies to attract users and uphold the peg. The aforementioned traditionalists adopt Tether’s strategy, using US dollar deposits and Treasuries to maintain the 1:1 equivalency. On the other hand, decentralized finance (DeFi) companies like Ethena or Dai favor complex crypto derivative and smart contracts to complement leaner fiat reserves. Across the board, companies grapple with the need to balance efficiency with regulatory compliance and predictability.
A Balanced Offering
Despite this difficulty, future market leaders will need to walk this tightrope. The ideal issuer must balance three pillars: a reliably fixed value coin, network connections that maximize potential user base, and an embrace of auditing/regulation.
One company that has adopted these three pillars is Circle, whose USDC stablecoin is the second largest by market cap. Their reserves are audited by Deloitte and stored as repos, short-dated Treasuries, and cash. Similarly, Circle’s euro-backed stablecoin, EURC, is supported by euro-denominated reserves held as cash in segregated, global bank accounts.
Even after breaking their USD peg amid Silicon Valley Bank’s (SVB) infamous 2023 collapse, Circle has regained the market’s confidence by diversifying away from regional banks like SVB assuring investors that reserve deposits would be fully available to them after the collapse.
The company has won further trust by embracing increased stablecoin regulation. Since launching USDC in 2018, Circle voluntarily published monthly reserve reports. Their rival Tether, the largest stablecoin by market cap, has never been fully audited. CEO Jeremy Allaire has led the charge, praising recent legislation like the GENIUS act and calling for all USD-pegged stablecoin issuers to be registered in the US.
Circle compounds on their transparency and stability mantra by combining USDC and EURC with a collection of Web3 services designed to increase user flexibility. While minting/redeeming services, smart contract, and developer tools are not unheard of in the industry, the company’s combination augments the company’s already robust stablecoins with a convenient, all-in-one package.
With their focus on accessibility and transparency, Circle’s leadership is confident the upcoming IPO is more than a chance to raise capital. Opening Circle to public investment brings the company one step closer to an ecosystem where the “speed, cost, and access” of blockchain commerce unlocks global prosperity.
Special thanks to Jonah Kim for his exceptional thought leadership, research, and editorial contributions to this article as well providing images and info-graphics.