Stablecoins: $314 billion and the battle for the digital dollar

Stablecoins: the digital dollar that now moves more than Visa and Mastercard

Stablecoins now out-transaction Visa and Mastercard combined, and the market hit a record $314 billion in October 2025. Along the way, the old guard of money —JPMorgan, Visa, Mastercard, PayPal, Western Union and even SWIFT— has stopped sneering at them and rushed to launch their own. But the bigger the race gets, the clearer the trap becomes: stablecoins are only stable as long as someone holds the line.

The fragmentation of the duopoly and the first warning shot

The joint dominance of Tether (USDT) and USD Coin (USDC) has fallen from 91.6% in early 2024 to 83.6% today. New players like Sky's USDS, Ethena's USDe, PayPal's PYUSD or World Liberty Financial's USD1 are bidding for a slice of the pie. The launch list reads like a procession of capitalism's household names: Western Union with its USDPT on Solana, JPMorgan with JPM Coin, Revolut with its EURR, Mastercard spending $2 billion on infrastructure.

The first warning shot came on November 6, when the synthetic stablecoins USDX and deUSD lost their peg: drops of 86% and 94% respectively. This wasn't money backed by Treasury bonds, but leveraged positions in other tokens. The deeper lesson was summed up by a comparison doing the rounds in the markets: stablecoins are like the stamps of Afinsa — the collateral was the paper they were printed on.

Why the BIS says they fail while banks rush to issue them

There's a contradiction that defines 2025. The Bank for International Settlements declared in June that stablecoins fail as money on all three essential tests: singularity, elasticity and integrity. Meanwhile, the world's biggest banks are fighting to launch their own. This isn't a technological battle; it's a fight over the tap of digital payments.

In the United States, the GENIUS Act has given legal cover to the frenzy. In China, eight regulators have extended the ban with a "ban 2.0" that explicitly covers stablecoins and tokenization. The Bank of England proposes holding limits of £20,000. South Korea says "CBDC yes, stablecoins out." The ECB, analysts suggest, has been left checkmated by the American push.

Behind the regulatory panic lies geopolitics. Deutsche Bank Research has published three reports between September 2025 and March 2026 describing how the United States is trying to replace the petrodollar with a digital stable dollar to keep the world on dollar-denominated payment rails. One analysis dubs the phenomenon colonialism 3.0 and notes that in Venezuela, USDT moved in a single year the equivalent of 17% of GDP, while the bolívar lost 70% of its value in three months. The dollarization the Marines couldn't achieve, Tether is pulling off.

Fractional reserve on top of fractional reserve

One argument hovers over the whole analysis: stablecoins are the fractional reserve of the fractional reserve. One real dollar backing multiple tokens, monetary multiplier on top of monetary multiplier, and a digital export of inflation. Standard Chartered estimates up to a trillion dollars could flow out of emerging-market banks into stablecoins before 2028.

The quick answer to whether it makes sense to hold stablecoins instead of fiat is that, for a European with a bank account, there's no advantage at all. The target audience is the 20% of the world's population who are unbanked — people suffering unstable currencies, capital controls and abusive remittance fees. For them, a digital dollar with 4% annual interest offered by PayPal is a revolution. For the system, it's a hemorrhage.

There probably won't be a single, spectacular collapse, but a slow erosion of monetary monopolies. The blockchain infrastructure will be mature when the next bailout arrives, and this time cash will be king for a very short time. The question isn't whether stablecoins replace fiat: it's who prints the last dollar and who gets stuck holding it. Stablecoins are already being handed the entire US debt. The rest is smoke.