Dear readers, hello!
This is the third issue of Stable Weekly, which will take you deep into an analysis of the stablecoin market experiencing profound transformation.
For a long time, stablecoin issuers primarily relied on interest income from reserve assets pegged to fiat currency (such as US Treasury bonds). However, this traditional profit model is facing severe challenges, with the uncertainty of high-interest environments, increasingly fierce market competition, and potential user demand for returns making reliance solely on reserve interest increasingly unsustainable.
Facing this transformation, major market participants are exploring different development paths. Stablecoin giant Tether has chosen an aggressive diversification route, actively transforming into an investment holding company, extending its tentacles into agriculture, media, sports, and even frontier technology fields, and strategically investing some profits in digital assets like Bitcoin. Tether achieved over $13 billion in profits in 2024, with its massive earning capacity providing a solid foundation for its diversification strategy.
Circle has chosen another path, focusing on building its core business and technological infrastructure, such as launching the USDCKit SDK to simplify payment integration and actively preparing for an IPO. Circle seems to be more anticipating further clarity in the regulatory environment, especially regarding "on-chain interest", with Coinbase CEO Brian Armstrong recently publicly calling for legislative reform to allow direct distribution of reserve interest to holders.
It is worth noting that the rise of yield-bearing stablecoins is bringing greater competitive pressure to traditional stablecoins, with JPMorgan predicting significant market share growth. Meanwhile, traditional financial institutions like Northern Trust, ICE, and Mastercard are also entering the market, exploring applications of stablecoins and tokenized assets.
As Shawn from Artichoke Capital pointed out, stablecoins are similar to money market funds, and their ultimate value will depend on practical application scenarios such as cross-border payments, DeFi, and the broader digital economy.
The current stablecoin market is in a critical transformation period. The traditional profit model driven by interest is being reassessed, and diversification, technological innovation, and practical applications will become key to future competition. This newsletter will delve into these trends and developments, hoping to bring you more insights.
[The rest of the translation follows the same professional and accurate approach, maintaining the specific terminology as requested.]Here's the English translation:Stablecoins are typically backed 1:1 by fiat currencies like the US dollar, with issuers investing these reserve assets in low-risk instruments such as short-term US Treasury bonds. The interest generated is usually retained by the issuer. The core concept of "on-chain interest" is to directly distribute these reserve asset-generated interests to stablecoin holders, similar to an interest-bearing checking account.
However, regulatory barriers obstruct this natural flow. The current impediments to on-chain interest primarily stem from existing laws failing to keep pace with technological developments. Unlike traditional interest-bearing checking and savings accounts, stablecoins currently cannot enjoy the same securities law exemptions, which imposes numerous restrictions on paying interest to users. New stablecoin legislation should be drafted to clear obstacles for all regulated stablecoins to directly provide interest to consumers, enabling them to operate like ordinary savings accounts without excessive disclosure requirements and tax implications.
Why this change is crucial:
US consumers can obtain near-market yields (4.75%) instead of banks' minimal returns (0.41%)
Globally unbanked populations can access US dollar stability and returns with just a mobile phone
Strengthen the US dollar's position by attracting global users into the dollar ecosystem
The current barriers are purely a result of regulatory lag - traditional checking accounts can pay interest, and regulated stablecoins should receive equal treatment.
[The rest of the translation follows the same approach, maintaining the original formatting and translating all text while preserving any HTML tags or links.]The total stablecoin supply on the Ethereum network has reached a historical high, breaking through $132.4 billion for the first time in nearly three years
The stablecoin supply on Ethereum increased by $321 million in the past day, $1.407 billion in the past week, and $2.786 billion in the past month
The global stablecoin market size has exceeded $200 billion, with USDT leading at $142 billion, and USDC ranking second at $49 billion
Ethereum accounts for 58% of global stablecoin supply, TRON 31%, and Binance Smart Chain 3%
🌱 Tokenized Treasury Growth Exceeds 500% Annually, But Represents Only 2% of Stablecoin Market
Key Highlights:
Tokenized US Treasury market value surged from $800 million to $5.2 billion, growing $1 billion in just two weeks, primarily from BlackRock and Securitize products
While stablecoin issuers like Tether benefit from reserve earnings, passing returns to users could trigger stricter regulatory obligations
Return transfer mechanisms and regulatory uncertainty are the main obstacles limiting rapid expansion of tokenized treasuries, with more complex compliance requirements for entering investment product areas
🌱 Ripple Partners with Chipper Cash to Enhance Payments in Africa Using XRP
Key Highlights:
Ripple partnered with African payment provider Chipper Cash to support cross-border payments using Ripple Payments and XRP
Chipper Cash has 5 million users across nine African countries, and this partnership will help users receive global funds quickly around the clock
XRP's application further solidifies its role as a global cross-border payment solution, helping address high costs and inefficiencies in traditional payment systems in Africa
🌱 Tokenized Gold Market Cap Hits New Record of $1.4 Billion, Trading Volume Exceeds $1.6 Billion
Key Highlights:
Tokenized gold growth: Market cap reached a historical high of $1.4 billion, with trading volume over $1.6 billion; Tether's XAUT (market cap $749 million) and Paxos' PAXG (market cap $653 million) dominate the market; physical gold price breakthrough above $3,000 per ounce boosts demand
Total market cap reached $231 billion, growing for 18 consecutive months; USDT market cap $144 billion, but market share dropped to 62.1%; USDC grew 7%, with market cap near $60 billion
Emerging trends: Ethena's USDtb stablecoin attracted over $1 billion in assets, becoming the 8th largest stablecoin; MiCA framework promotes Euro stablecoin development, with Circle's EURC market cap growing 30% to $157 million, representing 45% of the Euro stablecoin market
Tokenized gold reflects increased demand for hedge assets, with significant market potential
Stablecoin market shows diversification trends, with regional and MiCA framework regulatory compliance bringing new opportunities
Capital Deployment
💰 Tether Increases Stake in Latin American Agricultural Giant Adecoagro to 70%, Stock Price Rises 7%
Key Highlights:
Agricultural Investment: Tether announced increasing its stake in Latin American agricultural company Adecoagro from 51% to 70%, acquiring shares at $12.41 each. Adecoagro's stock price rose 7% pre-market to $11.95
Diversified Deployment: Tether simultaneously expanded entertainment industry investments, acquiring a 30.4% stake in Italian media company Be Water for €10 million
Why It Matters:
Tether's agricultural investment demonstrates its strategic expansion beyond crypto, seeking stable and sustainable revenue sources
Its diversified deployment helps spread risk, further consolidating its position as the world's largest stablecoin issuer, while attracting more traditional investors' attention
💰 Circle Hires Investment Banks to Advance IPO, Expected to Publicly Submit Filing by Late April
Key Highlights:
Despite USDC market cap previously exceeding $50 billion and dropping due to Silicon Valley Bank events, it has now recovered to a historical high of around $60 billion, but its revenue is highly dependent on interest income
Circle's valuation has decreased from $9 billion in February 2022 to around $5 billion in recent secondary markets, with this IPO seeking a valuation between $4 billion and $5 billion
Why It Matters:
Circle's IPO will test market confidence in the stablecoin business model, especially with its single revenue source (currently 99% from interest income)
Progress on US Congressional stablecoin legislation is a positive signal that may create a more favorable regulatory environment for its business development
With cryptocurrency and traditional financial institutions increasingly entering the stablecoin market, competition is intensifying, and Circle needs to prove its business diversification capabilities to attract investors
💰 Stablecoin Giant Tether Adds 8,888 Bitcoin in Q1, Total Holdings Reach 92,646 Coins
Key Highlights:
Tether purchased 8,888 Bitcoin for $735 million in the first quarter of 2025
Currently, Tether's total Bitcoin holdings exceed 92,647 coins, valued at approximately $7.8 billion. This is part of the company's strategy since May 2023 to use 15% of quarterly profits to purchase Bitcoin as a reserve asset
