Why did the currency circle evaporate $900 billion, but the market value of stablecoins hit a record high?

Author: shu , BlockBeats

Since Trump took office, the total market value of cryptocurrencies has evaporated by nearly $900 billion, but the total market value of stablecoins has increased by 1.03% in the past week, exceeding $227 billion, a record high. The community can't help but wonder what factors are driving the market value of stablecoins to rise against the market?

As the stablecoin market value breaks through record highs, Frax Finance Sam said on Twitter that the bear market is a bull market for stablecoins, saying, "Another way of falling prices is the appreciation of the dollar, in which on-chain dollar issuers will get the most profit, especially as favorable regulation is coming."

Not long ago, CryptoQuant CEO Ki Young Ju also posted an analysis that the past copycat season capital flow cycle has been outdated. "Bitcoin-led crypto asset rotation has basically ended with regulatory and institutional adoption. New capital will flow through stablecoins or widely adopted altcoins - a completely different thing from the traditional scatter season.

Against the backdrop of volatile downward trends and pressure on crypto assets and US stocks, the rise of stablecoins against the trend to consolidate the hegemony of the US dollar may have become the biggest winner in recent market turmoil.

Loose supervision

"We are about to develop a bipartisan legislative framework for stablecoins and market structure," Cynthia Lummis, a crypto-friendly U.S. crypto-friendly Senator Cynthia Lummis said at the first hearing held by the Senate Banking Digital Assets Subcommittee yesterday.

At the first White House crypto summit last Friday night, where little news leaked, Trump expressed his hope to receive a stablecoin legislation bill before Congress recession in August to promote federal regulatory reforms in cryptocurrencies, and reiterated his hope that the dollar would "maintain a dominant position in the long term."

U.S. Treasury Secretary Scott Bessent promised to consolidate the dollar's global reserve currency status with digital assets, saying, "We will think deeply about the stablecoin system, and as President Trump directs, we will maintain the United States as the world's dominant reserve currency, and we will use stablecoins to achieve this."

This statement highlights the US government's concerns about macroeconomic and geopolitical uncertainty, which may lead to a decline in demand for US bonds by foreign investors, which in turn pushes up Treasury yields. In the past year, Japan and China, the top two major U.S. Treasury bond holders, have continued to reduce their holdings of US bonds. In order to maintain the status of the US dollar as a global reserve currency, it is necessary to ensure the continued demand for US bonds in the international market.

By holding US Treasury bonds as reserve assets, stablecoins can not only help lower Treasury bond yields, but also simultaneously expand the global circulation map of the US dollar. Stablecoins need to reserve sufficient dollars to meet investors' redemption needs, and Tether is currently one of the largest holdings of March U.S. Treasury bonds.

The total market value of stablecoins has surged by $50 billion since Trump was elected; Source: DeFiLlama

Specifically at the policy level, the United States has proposed two stablecoin bills - the House of Representatives' Stablecoin Transparency and Accountability Act (STABLE Act) and the Senate's GENIUS Act, which aims to regulate stablecoin issuers through licensing requirements, risk management rules and 1:1 reserve support.

The two bills propose different frameworks but agree on strict compliance measures. Both support private, dollar-backed stablecoins and ban central bank digital currencies (CBDCs).

The main differences include:

· Regulatory Supervision (GENIUS allows states to regulate issuers until market capitalization reaches $10 billion; STABLE allows opt out of federal regulation if state-level rules meet standards)

· Reserve requirements (STABLE allows the use of Treasury bonds, bank deposits and central bank reserves, while GENIUS also includes money market funds and reverse repurchases)

· Consumer Protection (GENIUS focuses on transparency and execution, while STABLE requires one-to-one reserves and prohibits algorithmic stablecoins)

Tighter regulation could challenge Tether's dominance, as both bills require monthly audits, asset quarantines and strict reporting, which could force exchanges to remove non-compliant stablecoins, similar to the impact of the EU MiCA. These laws will also pave the way for the legalization of stablecoins, attract institutional adoption, and create barriers for issuers that are not transparent enough. If passed, they will establish clear guidelines for stablecoin issuers to ensure market stability and compliance.

This morning, FOX Business reporter Eleanor Terrett posted on social media, saying, "As far as I know, an updated version of the stablecoin bill of the Republican Senator Bill Hagerty, the GENIUS bill, will be released tonight (local time). As of this morning, the U.S. Senate Banking Committee is still planning to modify the bill on Thursday."

The new version of the document expands reciprocal provisions for overseas payment of stablecoins, adding reserve requirements, regulation, anti-money laundering and counter-terrorism measures, sanctions compliance, liquidity requirements and risk management standards, aims to promote international transactions and achieve interoperability with overseas dollar-denominated stablecoins.

The stablecoin FOMO wave is coming, what opportunities are there in the

future?

Against the backdrop of Trump's clear desire to clarify the stablecoin-related bills by August, including Japan, Thailand, and the U.S. government departments are making efforts to adopt stablecoin.

On March 10, the Securities and Exchange Commission of Thailand has identified stablecoins USDT and USDC as compliant cryptocurrencies. The approval means that USDT and USDC can conduct legal transactions in Thailand, paving the way for stablecoins to be listed on regulated trading platforms in Thailand, and laying the foundation for the widespread use of USDT and USDC in the payment field in Thailand.

On the same day, the Japanese cabinet announced the approval of proposals on reforming laws related to crypto brokerage and stablecoins. According to an announcement from the Japan Financial Services Agency (FSA), the government has approved a cabinet resolution to amend the Payment Services Act. The bill would allow crypto companies to operate as "intermediary businesses". This means brokers will no longer need to apply for the same type of license as crypto trading platforms and crypto wallet operators. The bill also provides more flexibility for stablecoin issuers in terms of the types of assets that support their tokens.

According to the Financial Times, some of the world's largest banks and fintech companies are eager to launch their own stablecoins, aiming to seize the cross-border payment market share they expect will be reshaped by cryptocurrencies.

Last month, Bank of America said it was interested in issuing its own stablecoins, joining established payment providers such as Standard Bank, PayPal, Revolut and Stripe, with the goal of competing with businesses dominated by cryptocurrency groups such as Tether and Circle.

The change came after a six-year revolt against Meta's Libra stablecoin, and was further boosted by U.S. President Trump's active support for cryptocurrencies. "It's like a business selling shovels amid the stablecoin boom," said Simon Taylor, co-founder of fintech consulting firm 11:FS, who compared it to FOMO.

In addition to Bank of America, other major players in traditional finance (TradFi) are also preparing for the development of stablecoins.

Standard Chartered Bank: It is promoting the Hong Kong dollar stablecoin project

PayPal: Plans to expand the issuance of PYUSD in 2025

Stripe: Acquisition of Bridge stablecoin platform for US$1.1 billion

Revolut: Explore the possibility of stablecoin issuance

Visa: Use stablecoins for payments and global business

Previously, the increase in stablecoin supply often drove cryptocurrency prices to rise, as these tokens were primarily used as short-term holding instruments for trading gaps. Now the application of stablecoins is breaking through the speculation scope - SpaceX uses stablecoins through Starlink sales in Argentina and Nigeria; ScaleAI uses it to pay overseas contractors.

The most direct trading opportunity lies in betting on which public chains mainstream institutions will choose to issue new stablecoins. Currently Ethereum, Base, Tron and Solana are the main alternative public chains. On February 26, Jesse Pollak, head of the Base Agreement, said that he plans to launch stablecoins on Base this year for all global currencies.

It can be seen that both the on-chain world and traditional finance are planning to focus on the United States and the US dollar stablecoins. As for the copycat season, perhaps as CryptoQuant CEO said - the capital flow cycle of the past copycat season has been outdated.