U.S. dollar-backed Tether, seen with Bitcoin and Ethereum coins, was the world's first stablecoin to launch in 2014. Getty Images
A new digital race is underway. The world’s two largest economies — the United States and China — are positioning themselves to dominate the future of money through stablecoins, a little-known but fast-emerging form of cryptocurrency.
Stablecoins could reshape how people, businesses, and governments transfer money globally. Unlike traditional cryptocurrencies, these digital tokens are tied to stable assets such as national currencies or commodities like gold. That peg keeps their value steady and makes them less volatile than Bitcoin or Ethereum.
Think of them as a “digital dollar.” Each token can be exchanged one-for-one with the real-world currency it represents. The system allows instant conversions worldwide without costly middlemen, promising faster and cheaper payments.
From Novelty to Possible Mainstream
Stablecoins first appeared in 2014 with the launch of Tether, pegged to the US dollar. For now, they remain far from everyday use.
“You can’t pay for groceries with stablecoins yet,” said Claire Wilson, a policy analyst with the Council of Canadian Innovators. “But because transactions are faster and cheaper, broader adoption is very possible in the future.”
One major use case could be remittances. Millions of immigrants send money home each year, often facing steep transfer fees. Stablecoins could cut those costs significantly, especially for families in regions like Latin America and Africa.
Built on blockchain, stablecoins bypass banks and financial institutions. That means payments can move directly between individuals across borders. But critics warn the same system could enable money laundering and other illicit transactions.
Fragile Trust and Past Failures
The stability of stablecoins depends entirely on trust in their one-to-one backing. If that peg breaks, panic withdrawals could spark a digital bank run.
That risk became reality in 2022 when Terra-Luna, a major stablecoin, collapsed. Billions were wiped out in days, shaking confidence in the sector.
Regulation is now playing catch-up. In July, US lawmakers passed the GENIUS Act, setting rules for issuing and using stablecoins. Supporters say it brings clarity for businesses. Opponents argue it lacks strong safeguards against fraud.
The European Union introduced its own framework in 2023 through the Markets in Crypto-Assets Regulation (MiCA). Meanwhile, American giants like Amazon, Walmart, JPMorgan, and Citigroup are reportedly exploring their own stablecoin projects.
