Original Title: "The Eve of Stablecoin Revolution -- The Explosive Surge of Circle and the Accelerated Frenzy & Opportunities for Stablecoins"

Author: Master Brother from Down Under

If there’s one thing recently that has sparked heated discussions among global financial professionals, whether in Web2 or Web3, it would undoubtedly be the meteoric rise of Circle after its IPO. While Web3 players have largely regretted missing the train, berating themselves for not boarding early enough and even going so far as to short it in frustration, Web2 players are bullishly FOMO-ing into the ride. This astonishing surge has left many traditional financial giants feeling unsettled, forcing them to confront the revolutionary impact stablecoins could have on a global scale. For the first time in a while, I feel like I’m witnessing history move forward at warp speed—it’s giving me some serious "big era" vibes.

Let’s first look at @CryptoHayes, aka Little Black, and his remarks in the article "Libra: Zuck Me Gently": "I was recently speaking with a board member of a major bank about stablecoins, and they said, 'We’re doomed.' They believe stablecoins are unstoppable and cited Nigeria as proof. I didn't realize the extent to which USDT has penetrated that country, but they told me that a third of Nigeria’s GDP is transacted using USDT—even though the central bank has made serious efforts to ban cryptocurrencies."

From my own travel experiences and deep dives into countries with poor monetary sovereignty, I’d say Nigeria is likely a microcosm of such nations. Anywhere plagued by rampant inflation and volatile exchange rates is primed to be disrupted by stablecoins, blockchain wallets, and even U cards. Regulatory crackdowns aren’t going to stop this shift.

However, compared to traditional black markets, the blockchain and stablecoin ecosystem significantly raises the difficulty of regulatory enforcement. Stablecoins could essentially evolve into a "financial Starlink system"—where funds can be freely settled without going through central banks. This is no longer just a financial reform; it’s a tug-of-war between national sovereignty and free markets.

The "seigniorage rights" of smaller nations are going to take a further hit. Personally, I feel that one of the most exciting dreams from the DeFi Summer—global financial flattening—is gradually becoming a reality. Picture this scenario: Users from Nigeria, Namibia, the Philippines, and even India or China exchange their local currencies for stablecoins, store them in digital wallets, and at one specific moment, collectively allocate them into a DeFi protocol (let’s say USDe here). They’d be enjoying yields of nearly 10% annualized—a rate not only free from depreciation but actively rewarding their savings.

What does that feel like? Global financial unification, baby! For asset managers, stablecoin issuers, RWA (real-world assets) projects, and wallet providers, the prospect is mind-blowing. Just consider the influx of new capital and participants flooding the system. It’s like back in the day when we could only afford local calls because long-distance was too expensive, let alone international calls. Then the internet arrived, and suddenly global communication—video included—became nearly free. Communication flattened, costs plummeted, and the world transformed into the interconnected global village we know today.

This is a major transformation — a financial revolution that could potentially change the behavioral patterns of a significant portion of the global population. We are now standing on the eve of this revolution.

However, the even bigger changes will likely originate from other traditionally currency-stable countries, including the United States itself, and even China. Once the Stablecoin Act is passed and dollar-pegged stablecoins are legitimized, mainstream finance will enter the scene at scale. Banks and payment giants (like Visa and PayPal) will directly issue stablecoins (such as PYUSD, and bank-issued USDC), while the current early players like Circle, Paxos, Fidelity, and BlackRock will accelerate the expansion of on-chain dollar-based businesses.

I have no doubt that we will witness the total market value of stablecoins rapidly increasing from the current ~$160 billion to surpass $500 billion, becoming the backbone for on-chain dollar transactions. A compliant ecosystem based on stablecoin-driven payments, settlement, AI, gaming, and DePIN will emerge rapidly. With policy shifts, media spotlight, fierce competition among stablecoin issuers to subsidize market expansion, and even presidents stepping in to personally endorse these assets, the number of stablecoin users is likely to achieve a significant breakthrough in the U.S., surpassing other developed countries. The proportion of people owning cryptocurrency digital wallets will also increase dramatically, laying the groundwork for the further explosion of Web3. Once USDC/USDT achieves compliance and is integrated into financial apps in more countries, it will unleash a dividend of hundreds of millions of new users globally.

Let’s talk about China: Recently, the former and current Governors of the People's Bank of China, Zhou Xiaochuan and Pan Gongsheng, have begun paying close attention to the global impact of dollar-pegged stablecoins and have spoken publicly about this topic. Zhou Xiaochuan noted, "Stablecoins (especially those pegged to the U.S. dollar) may drive dollarization, posing threats to economic sovereignty and monetary policy independence, and should be subjected to cautious evaluation." Pan Gongsheng responded from a practical and regulatory perspective, stating that the central bank has already integrated stablecoins into the broader digital currency agenda and is addressing potential risks through institutional and policy mechanisms.

While China's "iron fist" approach to domestic control — with strict propaganda, information lockdowns, and financial regulation — has proven exceptionally effective compared to third-world countries, it is undeniable that awareness and demand for stablecoins among Chinese citizens have been steadily growing. The recent crackdown on U cards and heightened financial regulation needs, in my view, are closely related to the proliferation of dollar-pegged stablecoins, which directly conflicts with China's forex control policies. Currently, China's approach to stablecoins can be summarized with three main strategies: "Block," "Divert," and "Replace."

1. Block includes

Regulating exchanges, over-the-counter (OTC) trading platforms, and fiat on/off ramps, but with limited effectiveness.

2. Divert includes

Promoting the digital RMB (e-CNY) as a domestic legal alternative, pushing e-commerce, cross-border scenarios, and port settlement systems to gradually test the waters with the digital RMB. This initiative has been in motion since 2023, even including a pilot program for cross-border taxi rides and payment trials between Hong Kong and Shenzhen. However, with "strict regulation, low returns, and primarily off-chain operations," this project is unlikely to gain significant traction.

3. Substitution Areas

Encouraging overseas institutions to issue RMB-pegged stablecoins (CNH stablecoin), such as:

· HKDC (promoted by the Hong Kong Monetary Authority)
· MobiDollar (in collaboration with Standard Chartered Bank)
· Red Date (the international version of the Blockchain-based Service Network, BSN)

The essence of this strategy lies in issuing the currency through "friendly third-party territories" to facilitate RMB circulation, rather than direct issuance by the central bank. Directly opening up the mainland is not feasible. However, the recent instance of JD.com openly advocating for stablecoins to reduce time costs in international settlements has brought more domestic entrepreneurs to understand this concept. We'll see how it unfolds over time.

Potential opportunities for retail investors:

1. Investment Opportunities

Since 100% U.S. Treasury reserves are required, stablecoins will essentially transform into "digital bond ETFs," with U.S. Treasuries becoming an increasingly clear foundational yield source for stablecoins. Consequently, the annualized yield on holding stablecoins may rise from 0% to 3-5%, aligning closely with U.S. Treasury yields. Simply put, in the future, wherever you place your stablecoins—be it on exchanges, wallets, or PerpDex platforms—most venues will likely offer high-security investment products, akin to Alipay's Yu’e Bao. The closer the yield aligns with U.S. Treasury annualized rates, the safer it will be. This could become a significant draw to attract outsiders to enter the crypto sphere. For instance, I asked some domestic retail investor friends—they'd be thrilled with a 2% yield on their investments, while a 5% return is almost unimaginable to them. Now, imagine earning interest simply by holding stablecoins, without the restrictions of China's wealth management platforms or bank accounts, no need for a Hong Kong account, and no hassles with bank transfers. Wouldn’t you go for it?

2. DeFi Projects

DeFi OGs know that DeFi is essentially "financial Lego" or "yield stacking." Based on U.S. Treasury yields as the foundation, numerous creative financial instruments can be built to enhance the yield on stablecoins. Beyond current DeFi leaders like AAVE, other projects such as Ethena, Pendle, and even veteran players like Frax may also benefit. However, I'm even more excited about the possibility of renewed market stimulation bringing about more DeFi innovations, especially in fixed-income projects like those experimented with during last summer. New projects mean new opportunities—for instance, early participation to reap airdrops, earning tokens by providing liquidity, becoming contributors, or holding tokens on the secondary market.

3. RWA Sector

The integration of yield-bearing stablecoins (interest-bearing) with RWA (Real World Assets) protocols is becoming a major trend. On-chain bonds and asset pools will directly underpin stablecoins. Even @coinbase is experimenting with directly supporting tokenized stocks, signifying the rise of RWAs. RWA-related tokens, whether old or new, are likely to hold more potential compared to other traditional crypto sectors. Currently, my top picks are $ONDO and $Plume. I also have a good feeling about some new ones, and I'll update on those later.

Final Thoughts:

The compliance and legitimization of stablecoins mark a significant moment of reconciliation and integration between cryptocurrency and the real world, potentially impacting the lives of hundreds of millions of ordinary people. This transition also holds tremendous opportunities; for instance, the astonishing rally of $CRCL, exceeding the expectations of the crypto community, is just one such indicator. Perhaps we've been cocooned in our small web3 bubble for too long, failing to place ourselves on a larger stage or in a bigger pond to measure the expectations and FOMO (fear of missing out) of outsiders about financial innovations (I include myself here—I had projected only up to 100 previously). Moving forward, let's seize more opportunities together. A new world is just beginning.

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