The stablecoin market saw some incredible records with issuers experimenting on new coins other than Tether (USDT) and Circle's USDC. Amidst this, Euro-backed stablecoins entered the market, but users still preferred USDT and USDC. Now, let's see what are emerging trends as we get closer to 2025.

As Bitcoin went above the $100,000 mark in 2024, the total issuance of Stablecoins hit new records with Singapore registering $1 billion worth of stablecoin payments which is likely to grow further as we enter a new year.

Let's check out the top 5 reasons why Stablecoins will explode in 2025.

Global regulatory frameworks favoring stablecoin adoption

In 2024, the Stablecoins market recovered 29% and touched $168 billion supply by mid-August with USDT and USDC accounting for 90% of it driven by adoption across the world like Hong Kong's stablecoin issuer sandbox pushing for integrating it into the existing crypto regulatory framework.

These regulatory changes will carry forward in 2025 as several countries like the UK and Japan etc are changing legislation for stablecoin adoption.

Governments across the world are trying to introduce regulatory sandboxes to maintain oversight and allow for innovation in the adoption of stablecoins like Hong Kong making way for financial institutions to innovate on stablecoins.

The European Union has Markets in Crypto Assets (MICA) managing stablecoin issuance across the EU while the Financial Stability Oversight Council (FSOC) ensures financial stability by monitoring stablecoin-related risks. Japan has the Payment Services Act for operational and reserve requirements for stablecoin issuers.

Meanwhile, the UK Economic Secretary Tulip Siddiq revealed in November that the British government is aiming to introduce a draft regulation for Stablecoins in early 2025. The experts are seeing this as a move to tackle crypto companies shifting to the US as a result of Trump's policies.

Rise of regulated Stablecoins

This year has shown how regulated Stablecoins can be profitable. The best example of this is Tether (USDT) which gained $5.2 billion in Q1 2024 after placing reserves in US Treasury bonds.

Through this strategy, a regulated stablecoin is launched first and then negotiated with a prominent crypto exchange to promote it. This results in consistent yields when users invest in fiat reserves. The crypto exchanges usually don't take any commissions on the stablecoin as a result of the promotional feature, which ultimately attracts traders. Even traditional financial giants have found it too hard to ignore this formula and gone stablecoin adoption.

Changes in the European Market

The stablecoin market is quite concerned about USDT’s status in Europe at present as it doesn't have a MiCA license which is necessary for compliance. In fact, many crypto exchanges are thought to be preparing to delist Tether for European users. If that happens, stablecoin will lose significant market share.

On the other hand, it will open up new avenues for Circle's USDC which already got the regulator's nod.

The MiCA framework encourages local players to enter the market as seen in the rise in the issuance of Euro-backed stablecoins in 2024. This will further enhance competition in this sector, causing the market to shift away from dollar-centric options.

Rise in Stablecoins payments orchestration

Crypto companies like BVNK will emerge as prominent players in 2025 because of their Stablecoins payments orchestration feature which makes way for greater adoption of the digital asset in avenues like paying millions of gig workers across the world. This infrastructure will make it easier to send and receive Stablecoins, just like bank payments.

In this year, stablecoin payments as B2B payment rail rose significantly as businesses and PSPs used this digital asset to settle payments for merchants and international partners. This will grow further in 2025 as marketplace platforms make sure their global hosts, sellers, contractors and creators get paid using stablecoins.

Stablecoins to get into local currency territory

Last but not least is the trend of Stablecoins capturing the local currencies market as coins pegged to the local currency grow. This is seen by how the UAE central bank launched dirham-backed stablecoin AE Coin which is the first central bank-regulated stablecoin in the world.

Local Stablecoins are more likely to be integrated into the banking systems of that jurisdiction as countries digitise their economies. This will make the stablecoin market grow further.

Already regulations like MiCA are set to enforce mandatory licensing for stablecoin issuers, making for banks to offer custody services which will act as a catalyst to integrate stablecoin into the traditional financial system.