Author: Nancy, PANews

As the stablecoin market continues to expand, its fundamentals are undergoing multi-faceted upgrades. Currently, from the thawing cooperation between Binance and Circle, to the intensive layout by crypto giants, to the frequent financing activities and the gradual improvement of the policy environment, the liquidity and application scenarios of the stablecoin sector are rapidly expanding, accelerating its emergence as one of the core narratives of this cycle.

Binance and Circle "Reconcile," Major Giants Accelerate Stablecoin Expansion

On December 11, Binance officially announced a strategic partnership with Circle, the issuer of the USDC stablecoin, to expand the adoption of USDC and support the development of a global digital asset and broader financial services ecosystem. According to the agreement, Binance will deeply integrate USDC into its product line, providing trading, savings, and payment services to its 240 million global users, and will include USDC in its company reserves. Circle will provide Binance with technical support, liquidity, and accompanying tools.

In response, Binance CEO Richard Teng stated that both parties will jointly promote innovation in stablecoins and the expansion of application scenarios. Circle CEO Jeremy Allaire emphasized that with Binance's rapidly developing financial super app ecosystem, USDC is expected to gain wider application.

This "historic reconciliation" has shocked the crypto community, especially given the previously adversarial background of the two companies. Looking back at last year, the stablecoin BUSD, jointly issued by Binance and Paxos, faced an investigation by U.S. regulators, which ultimately forced Binance to withdraw this important business line from the center stage of stablecoins. Circle was seen as the behind-the-scenes "whistleblower" in this investigation; according to Bloomberg, Circle reported to the New York State Department of Financial Services (NYDFS) in the fall of 2022 that Binance did not have sufficient reserves to support its BUSD tokens issued through Paxos.

However, today's cooperation not only marks a handshake between two major competitors but also lays a new foundation for the larger-scale expansion of stablecoins.

In fact, major crypto companies have been increasingly active in the stablecoin sector during this period. For example, Binance has recently expanded the application of multiple stablecoins, including the integration of the stablecoin FDUSD on the Sui network and USDT on the Aptos network.

Tether has also made several important moves recently. For instance, Tether has significantly increased the minting volume of USDT, with a total minting volume reaching $4 billion this month, and over 100 million on-chain wallets currently holding USDT; USDT has been recognized as a virtual asset by the Abu Dhabi Global Market. Meanwhile, Tether is accelerating its expansion across multiple blockchains, including the launch of USDT on the TON chain and plans to introduce it to the Aptos network.

Circle is also accelerating its layout. Recently, Circle announced the launch of the cross-chain transfer protocol CCTP V2, reducing settlement time from several minutes to seconds, with plans to support Ethereum, Base, and Avalanche networks by early 2025, and to expand to more blockchains in the future; at the same time, Circle announced the launch of USDC on Aptos and plans to support platforms like Unichain.

Additionally, Ripple's stablecoin RLUSD has also announced approval from the New York Department of Financial Services, initially open only to institutional clients.

These developments indicate that the stablecoin market is rapidly evolving, especially as the accelerated layout by leading companies will undoubtedly drive the penetration and application of this sector within the global financial system. Furthermore, PANews recently summarized the progress in the European market in the article "The EU Launches a Stablecoin War: 21 Issuers Compete, Circle Takes the Lead, Tether Supports 'Agents'".

Total Market Value of Stablecoins Surpasses $200 Billion, Ecosystem Flourishing Driven by Investment

The stablecoin market has reached a milestone moment. According to DeFiLlama data, as of December 12, the total market value of stablecoins has reached a historic high, surpassing the $200 billion mark. Asset management firm Bitwise predicts that the market size of stablecoins may double next year, reaching $400 billion.

In fact, the role of stablecoins in the global financial system is becoming increasingly prominent, and their application scenarios are becoming more diversified. According to a recent research report by Standard Chartered Bank, stablecoins are evolving from being used only on cryptocurrency exchanges to becoming important tools in the global financial sector. Particularly in emerging markets where traditional cross-border banking services are limited, stablecoins provide a fast and reliable digital dollar asset transfer solution. Surveys show that in countries like Brazil, Turkey, Nigeria, India, and Indonesia, 69% of respondents use stablecoins as a currency alternative, 39% for payment of goods and services, and another 39% for cross-border payments.

Especially now, with the rise of more innovative stablecoin projects, the ecosystem is becoming richer, while the market's demand for this tool continues to rise, and the influx of capital provides more possibilities and imagination for the further development of stablecoins. According to PANews statistics, at least 23 stablecoin projects announced financing in the second half of this year, collectively raising over $1.86 billion, with Bridge's financing amount reaching $1.68 billion, primarily due to its acquisition by payment giant Stripe for $1.1 billion in October this year.

For example, Binance Labs recently announced an investment in the Solana stablecoin trading infrastructure project Perena, which aims to address the fragmentation of the stablecoin ecosystem through its product Numéraire and reduce the capital requirements for issuing new stablecoins. Platform users can mint stablecoins through this protocol, obtain tokenized real-world asset returns, and utilize a layered collateralized debt position system to achieve customized risk-return configurations.

The stablecoin-driven financial platform KAST also announced the completion of a $10 million seed round financing, co-led by Peak XV and HongShan, investment firms spun off from Sequoia, which allows users to hold and use stablecoins through traditional payment channels and provides credit card services usable in standard merchant networks, enabling users to spend their stablecoin assets at merchants that do not support crypto payments.

Cross-border stablecoin payment company Sphere completed a $5 million financing led by Coinbase Ventures and Kraken Ventures. This agreement enables stablecoin cross-border payments between enterprises through partnerships with global fintech companies and licensed remittance service providers, allowing stablecoins to be exchanged for local fiat currencies in supported regions.

The continuous advancement of these innovative projects not only injects new vitality into the development of stablecoins but also gradually expands their role in the global financial ecosystem.

At the same time, the global regulatory environment for stablecoins is also gradually improving, with policy trends in various regions providing institutional support for the development of stablecoins. Hong Kong's latest "Stablecoin Regulation Draft" will be submitted for its first reading in the Legislative Council on December 18, proposing a regulatory framework for fiat-backed stablecoin issuers, marking a substantial step forward in stablecoin regulation; the Central Bank of Brazil is expected to lift the ban on self-custody of stablecoins, with a more open regulatory attitude; the upcoming "Markets in Crypto-Assets Regulation" (MiCA) in the EU is also expected to become an important milestone in global stablecoin regulation, providing more compliance guarantees for the stablecoin market; while the unapproved "Payment Stablecoin Clarity Act" in the U.S. could provide licenses to stablecoin issuers, with Trump's impending return seen as likely to accelerate the introduction of this crypto legislation.

In summary, under the active layout of leading crypto companies and the continuous influx of capital, stablecoins are opening up more application scenarios to meet the urgent demand of the global financial market for convenient, secure, and efficient payment tools, thereby accelerating the transition of stablecoins from the crypto fringe to the mainstream financial market. Meanwhile, the gradual advancement of policies in various countries is also paving the way for the compliance and standardization of the stablecoin market.

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