How Many Stablecoins Will Survive? — Why It Won't Be a Winner-Takes-All Market
[Series Theme]
The Future Landscape of Stablecoins — Which Currencies Will Dominate Which Financial Spheres?
The stablecoin market is getting noisy. Until now, USDT and USDC have been at the center. Even today, these two hold a massive share.
Amidst this, the number of companies entering the stablecoin business shows no signs of decreasing. There are already hundreds of stablecoins in existence, and just recently, the Open USD initiative, involving over 140 companies led by the Stripe group, was announced.
However, there is no need for this many stablecoins. Ultimately, usage will concentrate on stablecoins with high circulation, and most currencies will disappear.
In the first place, we have entered an era where it is difficult to differentiate based on the functions of stablecoins themselves.
・Exchangeable for 1 dollar
・Available for transfer 24/7/365
・Automation of fund transfers
These functions are now standard. Furthermore, as regulations are established, conditions such as reserve holdings, information disclosure, redemption, and protection of customer assets will also become standardized.
In addition, stablecoins are subject to a "network effect" where the value increases as the number of users grows, which in turn attracts even more users.
Currencies that are listed on many exchanges, support multiple blockchains, and have high liquidity are easier to use. As liquidity increases, it becomes easier for exchanges and companies to adopt them. Looking at this point alone, the stablecoin market will also converge toward a small number of massive currencies.
Here, a sense of anxiety crosses my mind.
Will late-coming stablecoins like SoFiUSD also disappear in this competition?
The answer is clearly "No."
SoFiUSD has unique strengths that others do not.
Furthermore, I believe that the future stablecoin market will not be unified into just one currency.
<Why stablecoins will not be unified>
◆Reason 1: Financial regulations differ by country and region
Stablecoins are always operated based on the laws of a certain country or region. Issuance conditions and the services that can be provided differ by country.
Unless regulations around the world are unified, it will not be completed with just one stablecoin.
◆Reason 2: The economic spheres and use cases differ
・High liquidity is required for crypto asset trading
・Trust, safety, accounting, and regulatory compliance are emphasized for B2B payments
・Identity verification, anti-money laundering measures, transaction records, and legal rights are important for financial institutions
・In emerging countries, they are sometimes used as a means of asset preservation
The required functions and roles differ greatly depending on the situation in which they are used. It is unlikely that one stablecoin will be optimal for all purposes.
◆Reason 3: Because important financial infrastructure cannot be dependent on a single company
・Using multiple cloud services
・Contracting with multiple payment companies
・Diversifying transaction banks
In corporate management, relying on only one company for important infrastructure is a major risk. This is to avoid the entire business stopping when failures, regulatory changes, changes in contract terms, or deterioration in the business partner's management occur.
<What determines victory or defeat is the "financial sphere">
Which stablecoins will ultimately survive?
The answer is extremely simple: it is currencies that can build their own financial sphere.
・There are customers who use it daily
・There are merchants who accept that currency
・There are exchanges where it can be bought, sold, or swapped
・It is connected to financial services such as deposits, loans, investments, and remittances
・Companies and financial institutions are continuously moving funds using that currency
This refers to a state where such a cycle of usage is established.
Just because the issuance balance increases does not mean an economic zone has been created. What matters is the substance of the circulation. Only when used in actual economic activities—such as payments, remittances, investments, loans, and securities settlement—does a stablecoin become financial infrastructure.
A successful currency is one that "you would be in trouble if you couldn't use."
＜A massive issuance balance alone is not victory＞
The issuance balance is important. The higher the liquidity, the easier it is for many exchanges, wallets, and companies to support it. However, the currency with the largest issuance balance is not necessarily the only winner.
If a currency establishes an indispensable position within a specific massive financial sphere, that alone holds sufficient value.
For example, if Open USD is deeply integrated into Stripe's payment network and used for corporate payments and merchant settlements worldwide, it can succeed even if its circulation volume does not exceed that of USDT on crypto exchanges.
Similarly, if SoFiUSD becomes a currency that connects SoFi members, Galileo, Technisys, and corporate banking services, moving between deposits, loans, investments, and remittances, it can build a strong position within the banking service sphere.
There is not just one yardstick for determining victory or defeat.
In the future,
・Currencies that dominate the crypto asset market
・Currencies that dominate corporate payments
・Currencies that dominate banking services
・Currencies that dominate the settlement of securities and tokenized assets
・Currencies used as digital dollars in emerging countries
It would not be strange at all for multiple winners to emerge in different areas.
＜Five major future camps＞
In this series, we will focus on five major camps when considering the future landscape.
◆USDT
USDT's greatest strength is its overwhelming liquidity and track record of use in the crypto asset market. It has established a position that cannot be easily replaced, especially in regions where access to dollars is limited and for moving funds in crypto asset trading.
◆USDC
USDC is expanding its use cases beyond crypto asset trading to include corporate payments, international remittances, and services for institutional investors. Circle is deploying USDC as a foundation for global finance, including payments and trading.
◆Open USD
The notable point about Open USD is the potential for leading companies in payments, cards, exchanges, and asset management, starting with Stripe, to integrate it into their existing customer bases and services.
◆USDG
USDG is attempting to expand its distribution network by distributing economic benefits to participating companies that contribute to its adoption, rather than having only a single company profit.
◆SoFiUSD
The characteristic of SoFiUSD is not just that it is issued by a bank. SoFi possesses a diverse range of services in-house, including deposits, loans, investments, credit cards, crypto assets, and international remittances. Therefore, SoFiUSD does not have to wait for external companies to participate; it can create usage scenarios within its own services.
In addition, currencies such as PayPal's PYUSD, Ripple's RLUSD, and stablecoins pegged to national currencies like the Euro or Yen are likely to coexist while playing different roles, each rooted in its own financial sphere.
For SoFiUSD, the strongest rival has appeared—.
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