One of the most talked-about keywords in the cryptocurrency market recently is 'stablecoin.' With the Trump administration's launch and the full-scale implementation of related regulations, interest in this sector has surged dramatically. Interestingly, unlike the past altcoin boom, this time we're seeing related stocks move first rather than the coins themselves.
The Origins and Development of Stablecoins
To understand why stablecoins emerged, we need to look at the early cryptocurrency trading environment. In the past, Bitcoin served as the reserve currency on crypto exchanges. If you wanted to buy altcoins, you first had to purchase Bitcoin, then use it to trade for other coins. It was common to see Ethereum prices displayed as something like 0.001 BTC.
But this system had major problems. Bitcoin's own high volatility made price displays unintuitive and trading inconvenient. This was an even bigger barrier for users in countries where accessing exchanges with fiat currency was difficult.
Tether emerged to solve these problems. The Tether company, under iFinex (the parent company of Hong Kong-based Bitfinex exchange), began issuing USDT. This was essentially a 'gift card' concept for use on exchanges - a digital currency pegged to the value of one dollar.
Three Types of Stablecoins
Stablecoins are broadly classified into three categories based on their value stabilization methods.
Fiat-collateralizedis the most common approach. The structure is simple: bring $10,000 and get 10,000 USDT issued. Currently, 99% of the market uses this method, with Tether's USDT being the prime example.
Crypto-collateralizeduses cryptocurrencies like Ethereum as collateral. DAI is a representative example - initially it only used Ethereum as collateral, but due to volatility issues, it now also incorporates dollar collateral and US Treasury bonds.
Algorithmicstablecoins attempted to control issuance through algorithms without actual collateral. Terra Luna was the most prominent case, but the 2022 collapse exposed the limitations of this approach. The crypto industry called this the dream of a 'crypto central bank,' but it proved impossible in reality.
America's New Regulatory Turning Point: The Lummis Act
After the Terra Luna incident, the US government began seriously regulating stablecoins. Treasury Secretary Yellen had already warned about the risks of algorithmic stablecoins before the collapse, and when it actually happened, she pushed for strong regulatory legislation.
According to the Lummis Act passed by the Senate, anyone wanting to operate a stablecoin business in the US must use only fiat currency collateral. Specifically, only dollar cash, dollar deposits, and US short-term Treasury bonds with remaining maturity of 93 days or less are recognized as collateral. Companies must also maintain reserves of 1:1 or higher and undergo regular audits.
What's interesting is that this law also applies to overseas issuers. Whether you're a US company or foreign company, you must comply with the same regulations to operate in America. This isn't intended to exclude overseas companies like Tether, but rather to bring them into the legitimate fold.
Tether's Remarkable Growth and Impact on the US Economy
Tether's growth has been truly remarkable. It currently holds 62% of the stablecoin market and generated $13.7 billion in revenue in 2024. This is higher than Morgan Stanley ($13.4 billion), Mastercard ($12.9 billion), and Citigroup ($12.5 billion).
Even more noteworthy is that Tether is a major buyer of US Treasury bonds. As of 2024, its Treasury bond purchases rank equivalent to countries in the 3rd-7th position globally, and its current holdings exceed those of South Korea or Germany. Despite having only about 100 employees, many of them are lawyers focused on regulatory risk management.
Half of Tether's revenue comes from US Treasury bond interest. This is what you might call a 'selling river water' business model. Customers deposit dollars, receive USDT in return, and Tether uses those dollars to buy US Treasury bonds and earn interest income.
Political Connections and Future Outlook
Tether's political connections are also intriguing. Howard Lutnick, who was CEO of Cantor Fitzgerald (which manages Tether's Treasury operations), currently serves as Secretary of Commerce, and his son has inherited the company. Additionally, Cantor Fitzgerald is known to hold some equity in Tether.
The US Treasury Department announced through the Lummis Act passage that it expects the stablecoin market to grow to $2 trillion by 2028. That's more than 13 times growth from the current $150 billion market. This also means new buyers for US Treasury bonds.
With China and Japan becoming net sellers of US Treasury bonds, stablecoin issuers are filling that gap as 'customers.' From the US government's perspective, there's absolutely no reason to antagonize them.
Conclusion: The Emergence of a New Financial Ecosystem
The development of the stablecoin market goes beyond simple cryptocurrency phenomena to show changes in the global financial ecosystem. Companies like Tether are generating revenue that surpasses traditional financial giants, and the US government is beginning to view them as collaborative partners rather than regulatory targets.
Particularly with the Trump administration's crypto-friendly policies, the stablecoin market is expected to show even faster growth. However, ensuring transparency and stability will be key challenges in this process.
From an investor's perspective, it seems more important to focus on stocks of related companies rather than stablecoins themselves. In fact, in this cycle, we're seeing related stocks move before the coins themselves. The growth of the stablecoin market has become an irreversible massive trend, and we should pay attention to the new financial ecosystem forming around it.