Stablecoins are not just a payment tool; they are the foundational layer for reconstructing the flow, settlement, and growth of value in the digital world.
Author: Alec Goh
In the digital age, financial infrastructure is being quietly rewritten—blocks interlocking, lines intertwining. At the core of this transformation are stablecoins—cryptocurrencies pegged to fiat currencies like the US dollar—evolving from speculative tools to key drivers of cross-border transactions, liquidity acquisition, and programmable finance.
Once, the application scenarios for stablecoins were limited to niche areas within cryptocurrency exchanges. Today, in regions facing inflation or capital controls, they are driving remittances, trade financing, and even payroll payments. As highlighted in HTX Ventures' research report "On-Chain Extension of the Dollar: Stablecoins, Shadow Banking, and the Restructuring of Global Payment Weight," stablecoins have become a "lifeline" in markets like Turkey, Argentina, Lebanon, and Nigeria—not for speculation, but for value preservation, settling cross-border transactions, and accessing US dollar liquidity.
This shift is not only behavioral but also structural. As capital flows on-chain, the infrastructure of currency itself is being reconstructed. Processes that were once completed through correspondent banks and SWIFT are now being realized through smart contracts and decentralized protocols, reducing costs and settlement times while enhancing transparency.
Programmable Value and Financial Synergy
Beyond speed and cost, programmability is redefining financial logic. Stablecoins can be embedded in smart contracts, automating compliance, custody, and interest payments—unlocking new synergy mechanisms for capital. For small and medium-sized enterprises and startups, this means access to financial tools that were previously available only to large institutions.
Platforms like Aave, Compound, and Curve have evolved into decentralized money markets, enabling the lending and swapping of stablecoins without intermediaries. This disintermediation not only enhances efficiency but also creates a demand for new trust mechanisms—driving the rise of on-chain proofs, reserve proofs, and real-time audits.
The Emergence of "Shadow Currency" and Systemic Risks
As the scale of stablecoins expands, they also introduce "shadow liquidity" into the global system. These are dollars existing outside the traditional banking system—circulating through wallets, protocols, and APIs, yet backed by real-world assets (RWAs) like short-term sovereign debt. Stablecoins are increasingly used as collateral, yield instruments, or re-staked assets, introducing a hierarchical risk structure—similar in nature to the shadow banking system, albeit with greater transparency.
However, transparency does not equate to immunity. Risks such as over-collateralization, smart contract exploits, and chain liquidations still exist—and are often amplified due to the composability of protocols. For stablecoins to achieve practical value on a global scale, systemic risk safeguards must evolve in tandem. This includes standardized audits, circuit breakers, and insurance mechanisms to control shocks in extreme scenarios.
HTX Ventures also points out that despite increased visibility of smart contracts, the complex interdependencies between cross-chain bridges and DeFi protocols introduce new systemic risks. These structures require protective measures on par with traditional financial markets—only constructed in a new language: code.
The Fragmented Landscape of Global Regulation
The regulatory landscape remains fragmented. In the United States, the recently proposed "GENIUS Act" aims to establish a clear and unified framework for stablecoin issuance. The bill requires 1:1 reserve backing in cash or short-term US Treasury securities, real-time audit disclosures, and restrictions on algorithmic or uncollateralized stablecoins—marking an important step toward integrating stablecoins into the formal financial system.
Meanwhile, Europe's MiCA framework mandates capital buffers and 100% reserve backing, while enhancing oversight and threshold setting for "significant" tokens. Approaches vary across Asia. Singapore has introduced a licensing regime for stablecoin issuers, focusing on reserve audits and redemptions. Hong Kong is developing a regulatory sandbox, while Japan requires stablecoins to be issued through licensed banks or trust companies. In contrast, Nigeria has issued stern warnings against the use of stablecoins, citing financial sovereignty.
For builders and investors, this patchwork landscape presents both regulatory risks and opportunities for first-mover advantages. Projects that proactively align with emerging standards may find it easier to attract institutional and payment service provider interest.
Stablecoins: The Wedge for Unlocking Real-World Utility
As the flow of value becomes increasingly digital, stablecoins uniquely blend crypto-native characteristics with real-world utility. From dollar settlements in emerging markets to tokenized US Treasury pathways for global investors, their application scenarios are rapidly expanding across industries and continents.
A significant signal of stablecoins moving into the mainstream is the listing of USDC issuer Circle on the New York Stock Exchange. As the first publicly traded major stablecoin issuer, Circle brings greater visibility and credibility to the space, helping bridge the gap between regulatory compliance and institutional adoption. This milestone solidifies USDC's positioning as a transparent and regulated stablecoin—commonly used for corporate settlements, fintech platforms, and increasingly in tokenized asset pathways.
This expansion is not occurring in isolation. It is part of a broader trend toward "decentralized infrastructure equipped with institutional-grade protections." With the development of RWAs, central bank integrations, and compliance-focused centralized decentralized finance (CeDeFi), stablecoins are becoming the organizational link between the traditional economy and the decentralized economy.
The future will not only be defined by code but also shaped by those who can navigate policy, build trust, and design responsibly scalable systems. In this sense, stablecoins are not just a payment tool—they are the foundational layer for reconstructing the flow, settlement, and growth of value in the digital world.
About the Author:
The author of this article, Alec Goh, is the head of HTX Ventures, the international investment arm of one of the world's leading cryptocurrency exchanges, HTX. Alec leads strategic investments in high-potential digital asset projects, focusing on infrastructure, compliance-first DeFi, and the stablecoin ecosystem. He oversees mergers and acquisitions and investment efforts at HTX Ventures, aiding the company's global expansion and completing several notable projects in the industry. With a global financial background and deep structured trading experience, Alec is dedicated to connecting institutional capital with the next generation of Web3 innovations.
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