Stablecoins Now Dominate Crypto – But Not Without Risk

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Stablecoins are increasingly dominant in the cryptocurrency landscape, now facilitating over 60% of all crypto transactions, according to recent data from TRM Labs. This marks a significant increase from just 35% two years prior.

Interest:

This surge in stablecoin usage reflects a growing global preference for fiat-backed digital currencies such as USDC and USDT. Their appeal lies in their speed, relative price stability, and suitability for various applications, including trading, cross-border remittances, and even as a store of value. In the first quarter of 2025, stablecoins accounted for 28% of total crypto activity, consistently representing 4% or more of the overall crypto market capitalization. Stablecoins have gained significant traction in emerging economies – particularly in Latin America, Southeast Asia, and sub-Saharan Africa – where they serve as a more stable, dollar-denominated alternative to volatile local currencies and inefficient traditional banking systems.

Desire:

However, the increasing popularity of stablecoins presents a challenge. While the vast majority (99%) of stablecoin use is legitimate, TRM Labs reports that stablecoins were implicated in 60% of illicit crypto transactions during Q1 2025. Their speed, liquidity, and widespread acceptance make them attractive for illicit activities such as money laundering, scams, ransomware attacks, and even terrorist financing. This inherent duality – the potential for financial inclusion alongside the risk of enabling criminal activity – has underscored the urgent need for comprehensive regulation.

Action:

In response, the U.S. Senate recently passed the GENIUS Act, a significant piece of legislation poised to reshape the stablecoin industry. The Act establishes a federal regulatory framework, strengthens compliance requirements, and seeks to protect both consumers and market integrity. The bill is now under consideration by the House of Representatives for final approval. Industry observers, such as Veronica McGregor of Exodus, have hailed it as a "momentous step" that could foster legitimacy and drive innovation within the stablecoin sector on a global scale.

Bottom Line:

Stablecoins are poised to remain a fixture in the financial landscape. However, the manner in which they are regulated will ultimately determine whether they serve as a valuable tool for financial empowerment or become a source of systemic risk. The fate of the GENIUS Act warrants close attention.