Stablecoins to Go Mainstream in 2025 After U.S. Regulatory Progress: Deutsche Bank

Stablecoins are on the verge of mainstream adoption this year as the Trump administration pushes ahead with landmark crypto legislation, investment bank Deutsche Bank said in a research report Monday.

Despite some resistance in the Senate last week, the bank said it still expects to see some progress on the stablecoin regulatory front this year.

Stablecoins are cryptocurrencies whose value is tied to another asset, such as the U.S. dollar or gold. They play a major role in cryptocurrency markets and are also used to transfer money internationally.

The Senate's Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act mandates federal regulation for stablecoins with a market cap of over $10 billion with the potential for state regulation if it aligns with federal rules. The House of Representatives' STABLE Act calls for state regulation without any conditions.

Stablecoin market cap has exploded in the last five years. Total stablecoin market cap is currently $246 billion, a massive jump from the $20 billion seen in 2020, the German bank noted. The largest, Tether's USDT, has a market cap of around $150 billion.

Stablecoins now "power over two-thirds of crypto trading, offering unmatched speed, 24/7 access, low-cost programmable payments," analysts Marion Laboure and Camilla Siazon wrote.

Stablecoins are increasingly becoming strategic assets, the report said. "With 83% pegged to the U.S. dollar and Tether ranking amongst the largest holders of U.S. Treasuries, they're reinforcing dollar dominance in a fragmenting world."

The Genius Act is expected to be passed in the U.S. in the coming months, and that could trigger an almost 10-fold jump in stablecoin supply, investment bank Standard Chartered said in a research report last month.

Read more: Stablecoins Will Expand Beyond Crypto Trading, Become Part of Mainstream Economy, Citi Predicts