Stablecoin’s Evolution Beyond the U.S. Dollar

The term “stablecoin” does not equate with a digital U.S. dollar, despite the significant presence of USD-backed assets in this expanding market.

A stablecoin’s value can be anchored to various assets, including commodities like gold or other cryptocurrencies. However, these are often employed more as investment vehicles rather than everyday payment tools. Many leading USD-backed stablecoins serve as yield-generating instruments or facilitate large-value settlements.

According to a report by Visa and Dune, non-USD stablecoins have gained significant traction in real-world applications, with the market value reaching $1.1 billion in February, having tripled over just three years.

This trend shows that roughly half of these stablecoins are held in institutional and individual wallets, while about a quarter reside on centralized exchanges, indicating active usage, possibly for cross-border payments, remittances, or business-to-business (B2B) settlements.

Stablecoin vs. CBDC

While Circle’s EURC leads in terms of transfer volume, a euro-pegged stablecoin, this is not surprising given the broad use of euros across 27 countries and ongoing efforts by European policymakers to address long-standing issues with cross-border payments.

Despite this, there is a clear preference for a central bank digital currency (CBDC) over privately issued stablecoins. The digital euro has entered a pilot phase and is expected to launch later in the year, driven partly by concerns about the dominance of USD-backed stablecoins.

Tough Road Ahead

Non-USD stablecoins have seen limited adoption outside Europe, with Brazilian real-based tokens representing a small segment compared to euro-denominated counterparts.

New entrants like South Africa’s ZAR Universal (ZARU), a rand-pegged digital asset, still face the formidable challenge of competing against USD-backed stablecoins, which account for over 90% of the global market valued at more than $310 billion.