2025 is the year of the stablecoin. We are going to see enormous things from this segment of the crypto market.
By "heating up" we do not refer to the traditional crypto mindset of "price go up". Obviously, this is counter to what you want from a stablecoin. Price stability is what is required, making it ideal as a medium of exchange.
This is basic utility but one that provides a massive function for the crypto world.
In this article we will cover three announcements and what it means.
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I long maintained that the stablecoin market will only enhance the reach of the US dollar. In an upcoming article we will discuss the network effects of that.
For the moment, we start with a department store chain in Singapore called Metro. This is a company that dates back to 1957. It just announced that it will integrate stablecoin payments into its system. This will occur both in store and online.
Metro Store customers will be able to check out using stablecoins like Tether’s USDt (USDT), Circle’s USD Coin (USDC), as well as FD121’s First Digital USD (FDUSD) and the Worldwide USD (WUSD) stablecoin issued by the Worldwide Stablecoin Payment Network, he added.
It should come as no surprise that USDC and USDT are two that are being accepted. Notice that the four mentioned are all USD denominated consider Signapore has its own currency (SGD).
Evidently, this company likes to be forward thinking.
Metro’s chief operating officer, Erwin Wuysang-Oei, highlighted that the company has always been committed to innovation and providing unique experiences for its customers.
“By integrating stablecoin payments, we’re not just embracing the future — we’re shaping it,” the exec said, adding that the integration marks a “transformative moment” for Metro.
Not surprisingly, Metro will phase out BTC and ETH for payments by the end of the year.
On the U.S. front, PayPal is seeking to expand the utility of its stablecoin, PYUSD. This is something that online payment system looks to gravitate towards as crypto payments accelerate.
The goal is to challenge the aforementioned stablecoin leaders. As the leading online payment system, there is a good change PayPal could have an impact, at least in theory. I still believe that, with stablecoin legislation, we could see many companies bringing out their own coin.
That said, it seeks to integrate the payments into 20 million small-to-medium sized merchants. After starting only on Ethereum, it expands to Solana.
In a recent interview with Bloomberg, Michelle Gill, PayPal’s general manager for small business and financial services group, revealed that the company plans to integrate PYUSD into 20 million small and medium-sized businesses as part of its expansion strategy for 2025.
PayPal echoes, to a degree, what I mentioned earlier. The company is seeking to appeal to those businesses which transact across national boundaries. Under the present financial system, this causes exchange rate risk as people convert from one currency to another.
Despite this setback, PayPal remains committed to expanding the stablecoin’s adoption. Gill told Bloomberg that much of PYUSD’s future growth will come from international transactions, as US merchants increasingly look for means to pay overseas suppliers without the hassle of currency conversions.
Again, we could see the standardization of the dollar. PYUSD, like all of the largest US denominated stablecoins, is backed by a combination of cash and US Treasuries. This is likely to keep growing as regulation enters the picture.
Which brings us to the third topic of the day.
You have to love when companies turn to regulatory capture. This is not meant to protect consumers but, rather, incumbents. It is a move undertaken to stifle competition as startups and smaller entities have issues with the cost of compliance. Adhering to regulations can be an expensive proposition while also hindering entrance into particular industries.
Circle obviously feels the time to exercise its might is now. There was a time when this company was the outside, attacked by the establishment. Now, it is part of Wall Street, looking to expand its domain.
The CEO of the company is in favor of compliance.
Jeremy Allaire insists that stablecoin issuers operating in the US should be officially registered to ensure compliance and financial integrity.
Is this a shot at Tether?
Whatever the motivation, we see how Allaire is trying to position the landscape. By playing to nationalism, something that makes little since in the blockchain world, he seeks to further ensure Circle's position. From a business standpoint, this is what CEOs do. There is a likelihood that, at some point, Circle goes public and Allaire will answer to shareholders.
It is likely that he gets his wish. I am sure that whatever stablecoin bill gets passed by the US Congress will have registration as a part of the equation. There is also a good chance that all USD approved stablecoins will require asset backing, probably in the form of US Treasuries.
This will wipe out the potential of algorithmic and other non-asset backed stablecoin coins. The result would be exclusion from centralized exchanges like Coinbase. Of course, if decentralized exchanges start to take up more volume, this could be a non-issue.
For all that is taking place within the crypto industry, I think stablecoins will see the most progress. With the tailwind provided by the US government and the ceasing of attacks on the industry, establishing payment systems is the first order of business.
After all, this was discussed within the industry for years.
In my view, a lot of this will stem from the fact more people are involved in cryptocurrency. As wallets fill up with different coins, the ability to transact increases. People will have value in their wallets, something that many will look to spend.
Merchants are always looking for ways to make payments easier. With larger platforms looking to provide this service, it makes sense for companies to accept payments. Due to volatility issues, stablecoins serve this role well.
Centralized entities such as Coinbase make it easy to link a crypto to a bank account. Stablecoin could enter the Coinbase wallet and then be processed out to the merchant's bank account. I surmise this is the norm with most exchanges. PayPal also provides this service.
Payments are the easiest thing to people to understand. This means that, as more people encounter crypto, stablecoins will be one of the first things they encounter. The goal here is not price go up. In fact, it is the exact opposite. Price stability is what merchants seek.
Globally, we will see a great deal of clarity regarding crypto. The United States getting on board is a big step as it is the largest economy. This is really going to send the utility of stablecoins skyrocketing.
