Stablecoins are nearing mainstream adoption as the US advances regulatory legislation.
Stablecoins are digital currencies pegged to more traditional assets like the US dollar or gold.
The market cap of stablecoins rose from $20 billion in 2020 to $246 billion in May 2025, Deutsche Bank said.
Stablecoins aren’t far from becoming mainstream, per Deutsche Bank.
Marion Laboure, managing director of thematic research at the German multinational investment bank, and analyst Camilla Siazon wrote in a presentation that the coins are likely to start being more widely used this year as the US pushes forward with legislation to regulate the crypto market.
Stablecoins are a type of decentralized digital currency that can be bought and sold on a blockchain, similar to cryptocurrencies like bitcoin and ether, and meme coins, such as $Trump and Dogecoin.
The most prominent stablecoin is Tether, with an overall market capitalization of around $150 billion, per CoinMarketCap, but dozens of others also exist. Deutsche Bank said the sector has a market capitalization of $246 billion.
The difference between stablecoins and regular cryptocurrencies is that stablecoins are pegged to other assets, often commonly used and relatively secure ones, including safe havens like the US dollar or gold. One stablecoin might be equal to one dollar, with the coin’s value rising and falling alongside the dollar.
Both the House bill, the Stablecoin Transparency and Accountability for a Better Ledger Economy (STABLE) Act, and the Senate bill, the Guiding and Establishing National Innovation for US Stablecoins (GENIUS) Act, aim to create a regulatory framework for dollar-denominated stablecoins.
Crypto legislation has faced some backlash. Senate Democrats have rallied against the GENIUS Act over concerns about President Donald Trump and his family’s links to the industry. Both Trump and his wife Melania have cryptocurrencies bearing their names, which launched soon after he became president.
The market capitalization of stablecoins has soared from $20 billion in 2020 to its current level, a more than 1200% surge. The coins also saw $28 trillion in transfer volume — the value of coins traded — last year, surpassing the levels of transfers made using major credit and debit card providers like Visa and Mastercard.
“They now power over two-thirds of crypto-trading,” the analysts said.
The analysts wrote that 83% of fiat currency-backed stablecoins are backed by the dollar. Over $120 billion in dollar reserves are held in stablecoins. Deutsche Bank said $99 billion in US Treasury bills are held in Tether, making it one of the top stores of US government debt worldwide.
Deutsche Bank’s analysts predict that mainstream adoption of stablecoins will lead to overall increased demand for US Treasurys.
“They are now integral to digital dollar infrastructure, transforming FX, liquidity, capital flows, and payment innovation,” Laboure and Siazon said.
“US regulation will bring clarity, enabling mainstream use cases and deeper financial integration.”
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