1. The Rise of Digital Dollars
For decades, international payments have depended on a financial infrastructure built around banks, correspondent banking relationships and established payment networks.
Although this system supports global commerce, moving money between countries can involve multiple intermediaries, currency conversions, processing delays and additional costs.
Stablecoins offer an alternative.
These are digital assets designed to maintain a relatively stable value by being linked to traditional currencies or other assets. The most widely used stablecoins are pegged to the US dollar, with each token intended to represent one dollar.
Unlike Bitcoin and many other cryptocurrencies, stablecoins are not primarily designed to increase in market value. Their purpose is to provide a digital representation of money that can move across blockchain networks.
The market has grown considerably. According to the Bank for International Settlements (BIS), global stablecoin market capitalisation reached approximately $320 billion at the end of May 2026. The vast majority of this market is dominated by dollar-denominated tokens. [1]
This growth is attracting companies that see stablecoins as more than cryptocurrency trading instruments. They could become part of the infrastructure supporting international payments, digital commerce, financial markets and corporate treasury operations.
However, the market is still developing. Stablecoins have not replaced traditional payment infrastructure, and their adoption in everyday commercial transactions remains relatively small.
2. Tether and Circle: The Companies Leading the Race
Two companies dominate much of the stablecoin industry: Tether and Circle.
Both issue dollar-backed digital currencies, but their businesses, distribution strategies and approaches to the market differ.
Tether (USDT)
<escape>USDT</escape> is the largest stablecoin by market capitalisation and has become a major source of liquidity across cryptocurrency exchanges and trading platforms.
Its widespread availability has helped establish it as one of the most important trading pairs in the digital asset industry.
Tether's financial position is also significant.
In its third-quarter 2026 report, published on 30 October, the company reported approximately $191.5 billion in total reserve assets, against approximately $183.5 billion in liabilities relating to issued digital tokens.
It also reported $132.4 billion in direct and indirect US Treasury bill holdings and approximately $7.95 billion in excess reserves. Tether reported $1.5 billion in net operating profit for the quarter. [2]
These figures demonstrate the scale of the financial reserves supporting its stablecoin business.
Circle (USDC)
Circle issues USD Coin (USDC), another major dollar-backed stablecoin.
USDC has developed a strong position among cryptocurrency exchanges, institutional investors and businesses looking for a dollar-denominated digital asset.
Circle emphasises reserve transparency and regulatory compliance. Its published reserve information showed approximately $71 billion in USDC circulation and $71.2 billion in reserves as of 26 October 2026. [3]
The company has also been developing its own blockchain infrastructure, including Arc, a network designed to support stablecoin payments and programmable financial applications.
The competition between Tether and Circle is therefore about more than issuing digital dollars. It is also about distribution, liquidity, institutional relationships, regulation and the infrastructure through which money moves.
3. Ripple Enters the Stablecoin Race With RLUSD
One of the most interesting developments for cryptocurrency investors is Ripple's expansion into the stablecoin market.
Ripple launched Ripple USD (RLUSD) in December 2024, introducing a dollar-backed stablecoin designed for institutional finance, payments and digital asset markets.
RLUSD is backed by reserves consisting of US dollar deposits, short-term US Treasury securities and cash equivalents. It is designed to maintain a one-to-one relationship with the US dollar.
The stablecoin operates across the XRP Ledger and Ethereum, with additional blockchain integrations expanding its availability.
Ripple's strategy is particularly interesting because the company already has experience developing payment infrastructure for financial institutions.
Rather than positioning RLUSD solely as another cryptocurrency trading token, Ripple is promoting it for several institutional applications:
Cross-border payments.
Corporate treasury management.
Digital asset trading.
Liquidity management.
Tokenised asset markets.
Collateral and settlement workflows.
The company is attempting to combine stablecoin liquidity with its broader financial infrastructure.
A major development arrived on 28 October 2026, when Ripple and Coinbase announced a partnership to bring RLUSD to Coinbase's platforms.
Retail and institutional customers can now trade and manage RLUSD through Coinbase Prime, Coinbase Exchange and the Coinbase retail application. The initial integration supports the XRP Ledger, Base and Ethereum.
Ripple also announced that RLUSD had surpassed $2.4 billion in market capitalisation since its launch. [4]
The Coinbase partnership is important because distribution is one of the biggest challenges facing newer stablecoins.
A stablecoin can have strong technology and reserve arrangements, but it still needs exchanges, payment providers, financial institutions and customers willing to use it.
Expanding access through a major cryptocurrency platform could help Ripple increase RLUSD's visibility and adoption.
4. Could Stablecoins Challenge Traditional Banking?
Traditional banking relies on established infrastructure to transfer money between financial institutions.
International payments can involve correspondent banks, payment networks and multiple settlement stages. Depending on the countries and institutions involved, these processes can take time and introduce additional costs.
Stablecoins could change parts of this process.
A business holding a dollar-backed stablecoin can potentially transfer it to another supported digital wallet without relying on the same sequence of traditional banking intermediaries.
Blockchain networks can operate continuously, meaning transfers do not necessarily need to wait for conventional banking hours.
This creates several potential applications.
International business payments
Companies operating across multiple countries could use stablecoins to transfer funds between suppliers, contractors and international subsidiaries.
Remittances
Individuals sending money to family members abroad could potentially use stablecoins to reduce transfer times and avoid some traditional intermediary costs.
Corporate treasury
Businesses could hold and move digital dollars between supported platforms, potentially improving access to liquidity outside traditional banking hours.
Digital marketplaces
Online businesses and payment providers could integrate stablecoins into their payment systems, allowing customers to transfer value using blockchain infrastructure.
However, the advantages depend on more than blockchain transaction speed.
Users still need reliable ways to convert traditional money into stablecoins and back again. Exchange fees, liquidity, local regulations and banking access can all affect the final cost.
Stablecoins may improve certain payment processes, but they do not automatically eliminate every inefficiency within international finance.
5. The $35 Trillion Transaction Volume Question
One of the most frequently discussed aspects of stablecoins is their enormous transaction volume.
Some industry estimates have placed annual stablecoin transaction activity in the tens of trillions of dollars.
However, these figures require careful interpretation.
Blockchain transaction data can include cryptocurrency trading, automated transactions, transfers between wallets controlled by the same entity and other movements that do not represent genuine payments for goods or services.
The Bank for International Settlements highlighted this distinction in its 2026 analysis.
Although annual stablecoin transaction volumes have been estimated at approximately $35 trillion, payment-related activity was estimated at around $390 billion during 2025. The BIS also reported that adjusted transaction values are substantially lower than headline blockchain volumes. [5]
This is an important distinction.
A stablecoin transfer between two cryptocurrency trading accounts is not necessarily equivalent to a company paying an overseas supplier or a customer purchasing a product.
The difference suggests that stablecoins have achieved substantial activity within digital asset markets, but their use as everyday payment infrastructure has further room to develop.
For the industry to fulfil its wider ambitions, payment adoption will need to grow beyond cryptocurrency exchanges.
6. The United States Is Building a Regulatory Framework
Regulation could determine how quickly stablecoins become integrated into traditional finance.
For years, stablecoin issuers operated in an environment where regulatory requirements differed across jurisdictions.
This created uncertainty for companies, financial institutions and investors.
The United States took an important step on 18 July 2025, when the GENIUS Act was signed into law.
The Guiding and Establishing National Innovation for US Stablecoins Act establishes a federal framework for payment stablecoins.
Among its central requirements are rules concerning permitted issuers, reserve backing, redemption, supervision and financial reporting. [6]
The legislation is designed to create clearer standards for companies issuing payment stablecoins in the US.
Implementation is now progressing.
On 21 October 2026, the Office of the Comptroller of the Currency (OCC) published its final rule implementing parts of the GENIUS Act for entities under its jurisdiction.
The rule covers areas including reserve assets, redemption, risk management, audits, reporting, custody and supervision.
It is scheduled to become effective on 18 January 2027. [7]
This is an important development because regulatory clarity could make it easier for established financial institutions to assess stablecoin services.
However, regulation also introduces costs and operational requirements. Smaller issuers may find it more difficult to meet the standards expected of permitted payment stablecoin providers.
The industry could therefore become increasingly competitive, with regulatory compliance becoming a major factor in determining which companies can operate at scale.
7. Europe Is Taking a Different Regulatory Approach
The European Union has already introduced its Markets in Crypto-Assets Regulation (MiCA), which establishes requirements for crypto-asset issuers and service providers operating within its regulatory framework.
Stablecoins are an important part of these rules.
MiCA distinguishes between different types of tokens, including e-money tokens and asset-referenced tokens.
Issuers face requirements relating to authorisation, reserves, redemption rights, governance and supervision.
An important development occurred on 14 October 2026, when the European Banking Authority classified USDC as the first significant e-money token under MiCA.
From 12 November 2026, USDC is scheduled to come under the dual supervisory arrangements established for significant e-money tokens, with the EBA taking responsibility for certain supervisory areas alongside the French regulator, ACPR. [8]
This demonstrates how stablecoin regulation is becoming more sophisticated as the market grows.
It also highlights a potential challenge for international issuers.
A company operating across the United States, European Union and other jurisdictions must navigate different regulatory requirements, even when its stablecoin is backed by the same underlying currency.
The ability to operate compliantly across multiple markets could become an important competitive advantage.
8. Could Stablecoins Strengthen the US Dollar?
One of the most significant geopolitical aspects of the stablecoin industry is the dominance of the US dollar.
Most major stablecoins are dollar-denominated.
This means that people and businesses can gain access to digital dollars through blockchain networks, even in countries where access to traditional US banking services may be limited.
For individuals living in economies experiencing inflation, currency depreciation or financial instability, dollar-backed stablecoins can offer an alternative way to hold value.
The BIS has highlighted the potential implications for emerging economies.
Its May 2026 research examined how widespread stablecoin adoption could affect international monetary systems, particularly in countries facing economic instability.
The report warned that dollar-denominated stablecoins could reinforce existing currency hierarchies and, in certain circumstances, contribute to digital dollarisation.
This could create challenges for governments attempting to maintain control over domestic monetary policy. [9]
The implications extend beyond individual investors.
If businesses increasingly hold digital dollars rather than local currencies, governments could face additional challenges in managing domestic financial conditions.
Stablecoins therefore have the potential to become more than a payment technology. They could also influence the international monetary system.
9. The Risks Behind the Stablecoin Boom
Despite their potential, stablecoins are not risk-free.
Their stability depends on the quality of their reserves, the reliability of their issuers and the ability of holders to redeem tokens.
Several risks deserve attention.
Reserve risk
A stablecoin issuer must maintain sufficient high-quality assets to support outstanding tokens and meet redemption requests.
If confidence in those reserves deteriorates, holders may attempt to redeem their tokens simultaneously.
Banking exposure
Stablecoin issuers still depend on traditional financial institutions to hold reserves, process payments and support redemption arrangements.
This means that stablecoins do not completely remove the banking system from digital finance.
Regulatory risk
Different jurisdictions may impose different rules, potentially restricting access to certain stablecoins or creating additional compliance costs.
Cybersecurity
Blockchain transactions can be irreversible. Wallet theft, compromised private keys and smart contract vulnerabilities can result in financial losses.
Market concentration
A large share of the stablecoin market is concentrated in a relatively small number of issuers.
This creates questions about competition, operational resilience and the potential consequences if a major issuer experiences difficulties.
Monetary sovereignty
Widespread adoption of foreign-currency stablecoins could weaken the influence of local currencies in some economies.
These risks demonstrate why regulation, transparency and reserve management will be central to the industry's long-term development.
10. Could Banks Become Stablecoin Issuers?
Another important question is whether traditional banks will eventually issue their own stablecoins.
Banks already provide custody, payments, deposits and settlement services. They also maintain established relationships with businesses and institutional customers.
Stablecoins could give these institutions another way to provide digital financial services.
Under the developing US regulatory framework, eligible institutions and approved entities may be able to issue payment stablecoins subject to applicable requirements.
This could create a new competitive environment.
Banks may seek to develop their own digital currencies, partner with established issuers or integrate third-party stablecoins into their payment services.
The competition could extend to:
International transfers.
Corporate payments.
Digital asset custody.
Tokenised securities settlement.
Liquidity management.
Financial applications built on blockchain networks.
However, stablecoins and bank deposits are not identical.
A bank deposit represents a liability of a regulated banking institution and may benefit from applicable deposit protection arrangements.
A stablecoin is a digital token issued under a different legal and regulatory structure. Its protections depend on the issuer, reserve arrangements and applicable laws.
Customers and businesses will need to understand these differences as the market develops.
11. What Could the Stablecoin Market Look Like by 2030?
The next four years could be important for the development of digital payments.
Several factors will influence the direction of the industry.
First, regulation will determine which issuers can operate and how financial institutions interact with stablecoins.
Second, payment adoption will need to expand beyond cryptocurrency trading.
Third, interoperability between blockchain networks could become increasingly important as businesses seek to transfer digital assets across different platforms.
Fourth, traditional banks and payment companies will need to decide whether to compete directly with stablecoin issuers or integrate their services.
There are several possible outcomes.
Scenario One: Stablecoins Become an Institutional Payment Tool
Stablecoins gain wider adoption among financial institutions and businesses, particularly for international payments, treasury operations and digital asset settlement.
Scenario Two: Banks Develop Their Own Digital Money Infrastructure
Traditional banks introduce competing products, potentially including regulated stablecoins and tokenised deposits. This could create a financial system where blockchain technology supports both bank-issued and privately issued digital money.
Scenario Three: Stablecoins Remain Concentrated in Cryptocurrency Markets
Regulatory restrictions, limited commercial adoption and competition from traditional payment systems prevent stablecoins from becoming a major everyday payment method.
These outcomes are not mutually exclusive. Different stablecoins could develop different roles across cryptocurrency markets, institutional finance and international payments.
The most important question is whether stablecoins can demonstrate genuine commercial utility at scale.
Conclusion: The Competition to Control Digital Money Is Intensifying
Stablecoins are becoming an increasingly important part of the financial technology landscape.
Tether and Circle have established major positions in the market, while Ripple is expanding RLUSD through new partnerships and institutional applications.
Governments are also beginning to introduce more comprehensive regulatory frameworks, recognising that privately issued digital currencies could play a growing role in payments and financial markets.
The recent Coinbase partnership demonstrates how competition is expanding beyond the issuance of stablecoins towards distribution and access. Meanwhile, developments in US and European regulation suggest that the industry is moving towards a more formalised financial environment.
However, the difference between cryptocurrency transaction volume and genuine payment adoption remains significant.
Stablecoins have not replaced traditional banking, and there is still considerable work required before they become a mainstream payment option for businesses and consumers worldwide.
Nevertheless, the direction of development is clear: financial institutions are increasingly exploring how digital currencies can operate alongside existing financial infrastructure.
The next stage of the competition will not simply be about which company issues the largest stablecoin.
It will be about which companies can build the trust, regulatory relationships, payment networks and institutional infrastructure necessary to make digital money useful on a global scale.
The race to reshape the future of money has begun, and stablecoins are becoming an increasingly important part of it.
Sources
Bank for International Settlements – Annual Economic Report 2026: Stablecoin Market Capitalisation and Financial Risks
Tether – Q3 2026 Financial Figures and Reserves Report (30 October 2026)
Circle – USDC Reserve Transparency and Circulation Data
Ripple – Ripple and Coinbase Partner to Expand Access to RLUSD (28 October 2026)
Bank for International Settlements – Stablecoins: Framing the Debate (20 April 2026)
The White House – GENIUS Act Signed into Law (18 July 2025)
Office of the Comptroller of the Currency – GENIUS Act Regulations: Final Rule (21 October 2026)
European Banking Authority – USDC Classified as the First Significant E-Money Token Under MiCA (14 October 2026)
Bank for International Settlements – The Impact of Stablecoins on the International Monetary and Financial System (5 May 2026)
McKinsey – Stablecoins in Payments: What the Raw Transaction Numbers Miss (18 February 2026)
Published by Banx Network. This article is part of the Banx decentralized media programme, powered by the BXE token on the XRP Ledger.
