In the future, independent payment solutions based on segmented industries in the real world may become possible.
Written by: Wenser, Odaily Planet Daily
As the price of BTC approaches a new high of $112,000, the U.S. stablecoin regulatory bill, the "Genius Act," is also gearing up. The cryptocurrency industry is further deeply coupled with the global economic system, and at this moment, people realize that the payment system is the crown of the cryptocurrency industry, with BTC being the jewel on that crown. This is one of the reasons why PayFi, U Card, and RWA have become battlegrounds for exchanges and crypto projects as the mainstreaming of crypto assets accelerates. In the future, independent payment solutions based on segmented industries in the real world may become possible.
In this article, Odaily Planet Daily will briefly outline and discuss the past development history and future direction of the stablecoin industry.
The Great Change in Stablecoins: The Decade of Crypto Originating from USDT (2014-2024)
In 2008, an article titled "Bitcoin: A Peer-to-Peer Electronic Cash System" appeared on the P2P Foundation website, authored by Satoshi Nakamoto, who is later revered as the founding father of the cryptocurrency industry. At that time, the world economy was slowly rebuilding after the 2008 subprime mortgage crisis, which had erupted due to severe inflation of the dollar. Undoubtedly, the original intention of BTC's birth was to address the chronic ailments of a centralized currency supply system and the lengthy, rigid, and inflexible global financial payment system.
However, contrary to the expectations of many crypto OGs, including Nakamoto, it was not BTC, which raised the banner of decentralization, that ultimately fulfilled the "peer-to-peer payment wish of BTC," but rather various stablecoins that are strongly tied to the dollar and U.S. Treasury bonds.
The Rise of USDT: Rural Surrounding the City, Use Cases Capturing the Market
Looking at Tether's history, we can roughly categorize its development into a "three-step strategy":
(1) From Crypto Blood to Crypto Oil
In October 2014, Tether was founded, with its core product being the stablecoin USDT issued based on the Bitcoin Omni protocol;
In February 2015, USDT was launched on Bitfinex, the trading platform with the largest Bitcoin trading volume at the time. Tether CEO Paolo Ardoino was also the CTO of Bitfinex, and the two companies have long been viewed as "brother companies" due to the high overlap of their team members;
In 2018, Tether issued USDT based on the ERC 20 standard on Ethereum. This standard-compatible USDT further enhanced its usability, and from then on, Tether and USDT began to gradually penetrate the crypto ecosystem like crypto blood, riding the wave of Ethereum's ecological development.
In 2019, TRON successfully partnered with Tether, and since then, TRON has been racing ahead in the stablecoin network's leading ecosystem, becoming a heavyweight cooperative network that accounts for over one-third of USDT's issuance. TRON founder Justin Sun also propelled TRON to become one of the infrastructures of cryptocurrency through an early distribution strategy.
It can be said that after the early redemption fee profit model was successfully validated, Tether had established its competitive barrier and business model through USDT, gradually becoming a trading equivalent like crude oil in the crypto ecosystem.
(2) From Crypto to Beyond Crypto
As we entered 2020, with the explosion of DeFi Summer, the market capitalization of stablecoins soared, and naturally, Tether and USDT seized the first-mover advantage. Tether's ambitions also expanded beyond the crypto world into a larger scope.
As mentioned in our previous article, "The Market Value of the 'First Stablecoin' USDT Hits New Highs, Unveiling the Billion-Dollar Business Empire Behind Tether": the use cases of USDT include being a general equivalent of cryptocurrency, an alternative currency in inflationary regions, and a primary payment tool for cross-border trade, among others. Additionally, after gaining massive profit returns, Tether extended its reach into the global economic system through various investments, acquisitions, U.S. Treasury bond reserves, gold reserves, and BTC reserves, strengthening its connections beyond the crypto world. This is also one of the important reasons why USDT has been criticized as a "money laundering accomplice." After all, money never sleeps, and neither does USDT.
(3) From Payment Means to Value Storage
In 2021, after reaching a settlement with the New York Attorney General's Office (NYAG) and paying a $41 million fine to the U.S. Commodity Futures Trading Commission, Tether cleared its biggest obstacle to development. From then on, the value of USDT began to gradually upgrade from a means of payment to a store of value. After experiencing previous de-pegging incidents and reserve asset FUD, USDT issued by Tether became one of the few assets to hold in the high-risk, high-volatility crypto market—another being BTC. Especially with the continuous purchase of U.S. Treasury bonds, its market position and brand recognition, which are pegged 1:1 to the dollar, were ultimately recognized by the crypto community, and the annual profits of tens of billions to over a hundred billion dollars provided the confidence to claim the title of "twin dollar."
From once wildly growing crypto projects to now the stablecoin hegemon, Tether and USDT have staged a spectacular drama of "rural surrounding the city, use cases capturing the market."
USDC's Second Path: Centralized Development, Crypto IPO
Unlike Tether's USDT, Circle, backed by Coinbase, and its stablecoin USDC have taken a completely different path: everything is built for compliance.
Aside from the usual U.S. Treasury bond reserves, Circle's profit model is undoubtedly more fragile compared to Tether, as partners like Coinbase and Binance can consume a large portion of its profits. This is also one of the important reasons for its push for crypto IPO listings after Trump took office—only by seizing existing advantages in compliance and timely expanding its base from the cryptocurrency field to the traditional financial market can it gain stronger bargaining power and obtain more robust funding, resources, and even policy support in subsequent market competition.
Aside from the two market giants, USDT and USDC, the competition for this lucrative "cake" has undoubtedly become increasingly fierce, with other stablecoin projects such as TrueUSD (TUSD), Circle Coin (USDC), Gemini Dollar (GUSD), Paxos (PAX), and currently still holding a certain market share like DAI (MakerDAO), USDS (Sky), USDe (Ethena), PYUSD (PayPal), RLUSD (Ripple), USD1 (WLFI), etc. Who can truly stand undefeated or become the ultimate winner remains to be tested by regulatory policies and verified by time.
https://defillama.com/stablecoins
The U.S. "Genius Act" Sparks a Wave of Stablecoin Regulation: Filling the Last Piece of the Crypto Regulatory Puzzle
For all stablecoin projects, the recent Senate vote to "release" the stablecoin regulatory bill, the "Genius Act," is undoubtedly the sword of Damocles hanging over their heads. After Bitcoin spot ETFs and Ethereum spot ETFs have become part of traditional institutional capital allocation, this bill will undoubtedly fill the last piece of the Trump administration's crypto regulatory puzzle.
Specifically, in my personal view, the main purposes of the Genius Act are:
Ensure dollar hegemony. As a staunch advocate of "America First," Trump's core goal, along with his government members and even Democratic members, remains to ensure the political and economic hegemony of the United States, and the primary medium to achieve this is the dollar. Stablecoins pegged 1:1 to the dollar are undoubtedly one of the best tools.
Ensure that the stablecoin system operates within U.S. jurisdiction. With a crypto-friendly environment now established, the U.S. is becoming a hotbed for crypto, which will help the U.S. gain the initiative in the operation of the stablecoin system and the formulation of regulatory policies. At that time, similar to past foreign trade regulations, the U.S. will achieve comprehensive suppression of the global crypto economy and even cross-border trade through the stablecoin system.
Ensure some security for the crypto financial system. This is also one of the important reasons why the Genius Act has received positive affirmation from many industry insiders and representatives of the traditional financial industry. Mandatory 1:1 full asset reserves, strict prohibition of misappropriation and re-pledging, monthly reserve reports with high-frequency information disclosure and external audits, banking-level regulatory licenses for market capitalizations exceeding $10 billion, and the introduction of custodians will add multiple layers of insurance locks to the stablecoin sector. Of course, whether the door behind those locks is solid is another question.
Greatly open up the imagination space for the RWA track, with a closer integration of on-chain and off-chain worlds. It can be said that stablecoins are the earliest RWA products, and the real-world asset they are pegged to is the U.S. dollar. With the gradual implementation of the Genius Act, the introduction and implementation of RWA-related bills are also believed to be not far off. Compared to the current cryptocurrency market of over $30 trillion, that will be an asset market worth hundreds of trillions of dollars.
Thus, the Genius Act will provide policy dividends for the U.S. government and the development of the digital economy, explore the potential of digital assets, and encourage the development of crypto projects, giving rise to a batch of promising crypto projects and their underlying teams. The geniuses carrying the future of crypto may be hidden within.
The New Decade of Crypto: Finance Remains the Main Line, Crypto Concept Stocks and Stock Tokenization Have Great Potential
Looking ahead to 2025, the proportion of the crypto population in the global population has already peaked at a certain stage, and cryptocurrency investment is still a game for a minority; however, on the other hand, in the commercial society, everyone has a natural demand for commodity exchange, where commodities can be tangible products, items, or intangible labor, virtual assets, digital IP, etc. Therefore, based on this demand, more convenient, low-cost, and safer crypto payments will eventually permeate everyone's daily life.
In the next decade (2025-2035), the main line of the cryptocurrency industry may gradually shrink from multiple tracks and fields that have been disproven by the market to the financial sector. Consequently, crypto concept stocks generated from crypto IPOs and stock tokenization will become a new battleground for the crypto industry.
In some respects, the stocks of currently listed companies such as Strategy, Sol Strategy, and Metaplanet have already become "dual-symbol carriers" of crypto concept stocks and stock tokenization. As the value of BTC receives broader and even higher price recognition, their potential value will also be further released.
Of course, within the visible range, the ETH ecosystem and Solana ecosystem remain the mainstream choices in the industry today.
Conclusion: Nakamoto's "Will" Finally Realized, but the Means of Realization Contradict the Original Intent
In conclusion, we cannot avoid mentioning Satoshi Nakamoto, the founder of Bitcoin, who has disappeared from the market's view. The ultimate embodiment of his "BTC peer-to-peer payment system" is undoubtedly stablecoins.
However, it is somewhat ironic that he, who harbored the spirit of crypto punk, may not have anticipated that BTC, born to combat the unchecked and ever-expanding minting power of authoritarian governments, would instead give rise to a stablecoin system that is more "dollar-centric and backed by U.S. Treasury bonds."
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