The Stablecoin Revolution: How Digital Dollars Are Reshaping Global Payments

Executive Summary

The stablecoin market has crossed a defining threshold. With a total market capitalization exceeding $300 billion and transaction volumes that have surpassed the combined throughput of Visa and Mastercard, stablecoins have evolved from a cryptocurrency niche into fundamental payments infrastructure.

The passage of the GENIUS Act in July 2025 marked the first comprehensive U.S. federal legislation governing stablecoins, establishing reserve requirements, consumer protections, and regulatory clarity that has accelerated institutional adoption. Major retailers including Walmart and Amazon are exploring their own stablecoin issuance, while payment giants Visa and Mastercard have pivoted from viewing stablecoins as threats to integrating them as settlement infrastructure.

This analysis examines the stablecoin ecosystem through multiple lenses: the economics of stablecoin issuers, the strategic responses of traditional payment networks, the practical implications for merchants, and the emerging consumer value proposition.

The central thesis: Stablecoins represent the most significant evolution in payments infrastructure since the credit card.

Market Scale & Growth

The stablecoin market has experienced extraordinary growth in 2025. Total market capitalization increased from approximately $205 billion at the start of the year to over $300 billion—a nearly $100 billion expansion in under twelve months. This growth rate dramatically exceeds 2024's $70 billion increase and reverses the $7 billion contraction experienced in 2023.

The market remains a duopoly dominated by two issuers:

This leaves approximately 15% of the market distributed among emerging competitors including PayPal's PYUSD, Sky Protocol's USDS, and Ethena's synthetic dollar USDe.

Economics of Stablecoin Issuance

The Tether Business Model

Tether has emerged as one of the most profitable financial companies in the world, rivaling Wall Street titans with minimal employees and infrastructure. The business model is elegantly simple: users deposit U.S. dollars, Tether issues equivalent USDT tokens, and the deposited dollars are invested in U.S. Treasury bills. Tether keeps the interest earned on these reserves.

In the first three quarters of 2025, Tether reported $10 billion in profit—exceeding Bank of America's $8.9 billion and approaching Goldman Sachs' $12.56 billion. The company expects approximately $15 billion in total profit for 2025, up from $13 billion in 2024.

Tether's Treasury holdings now exceed $135 billion, making it the 17th largest holder of U.S. government debt globally—ahead of South Korea, Germany, and the UAE.

USDC and the Compliance Premium

Circle, the issuer of USDC, has pursued a different strategic positioning. While smaller than Tether by market capitalization, USDC has cultivated institutional credibility through regulatory compliance and transparency. Circle became the first MiCA-licensed stablecoin issuer in July 2024, enabling operations across the European Union.

USDC reserves consist entirely of cash and short-term U.S. Treasury bills, with regular attestations by independent accounting firms. Circle's June 2025 IPO was notably successful, with shares surging 168% on their first day of trading.

Disruption to Credit Card Processors

The Core Economic Challenge

The fundamental disruption stablecoins present to traditional payment networks is economic. Credit card interchange fees average approximately 2.35% per transaction for Visa and Mastercard, plus per-transaction fixed fees. For high-volume merchants, these fees represent billions in annual costs.

Stablecoin transactions on modern blockchains cost a fraction of a cent. Solana's base transaction fee is effectively negligible, while Ethereum Layer 2 networks like Base offer transactions for under $0.01.

Where Stablecoins Compete vs. Where They Don't

A critical architectural distinction is often overlooked: stablecoins primarily compete with settlement infrastructure (ACH, SWIFT, wire transfers), not the payment network layer (Visa/Mastercard authorization and routing).

When you swipe a credit card, Visa doesn't move money—it moves data. The authorization, fraud checking, and routing happen in seconds, but actual settlement between banks occurs later through separate systems. Stablecoins offer a compelling upgrade to this settlement layer: transactions that are both authorized and settled simultaneously, 24/7, in seconds.

However, credit cards provide bundled services that stablecoins currently don't replicate:

• Credit extension: Consumers borrow from the issuer and repay monthly
• Consumer rewards: Cashback, points, and travel benefits
• Fraud protection: Chargebacks shield consumers from unauthorized transactions
• Universal acceptance: 150+ million merchant locations globally

This is why Mastercard's Chief Product Officer noted that 90% of current stablecoin volume is for crypto trading, not general-purpose payments.

Visa & Mastercard's Response

Rather than fighting stablecoins, both major card networks have adopted an integration strategy—positioning themselves as the infrastructure layer that connects stablecoin innovation with traditional commerce.

Visa's Stablecoin Settlement Program launched in 2023 and has since settled over $3.5 billion in annualized stablecoin volume. In December 2025, Visa expanded USDC settlement capabilities, enabling partner institutions to fulfill VisaNet settlement obligations using stablecoins. The program now supports USDC, PYUSD, USDG, and EURC across four blockchains: Ethereum, Solana, Stellar, and Avalanche.

Mastercard's Multi-Token Network (MTN) represents a parallel approach. In April 2025, Mastercard rolled out full-stack support for stablecoin payments covering issuance, acceptance, and settlement. In November 2025, Mastercard partnered with Ripple, WebBank, and Gemini to pilot settling credit card transactions in USD stablecoins over public blockchains.

The Strategic Logic

The card networks' response reflects a sophisticated understanding of their competitive moats. Disrupting Visa and Mastercard's payment network layer is extraordinarily difficult given:

• Consumer behavior patterns and adoption friction
• Acceptance infrastructure across 150+ million merchant locations
• Decades of trust, governance, and dispute resolution systems

By integrating stablecoins into their settlement infrastructure, Visa and Mastercard can offer blockchain settlement benefits (speed, 24/7 availability, lower back-end costs) while preserving their position as the authorization and routing layer.

Impact on Merchants

The Shopify-Stripe-Coinbase Integration

The June 2025 partnership between Shopify, Stripe, and Coinbase represents the most significant merchant-facing stablecoin deployment to date. Shopify merchants across 34 countries can now accept USDC payments on Coinbase's Base network through their existing checkout flows.

Key features:

• Opt-out model: Stablecoin acceptance enabled by default
• Local currency settlement: Stripe converts USDC to merchant's local currency
• No FX fees: No foreign exchange or cross-border fees
• Merchant rebates: Up to 0.5% rebate on USDC orders

Walmart, Amazon, and Retailer-Issued Stablecoins

In June 2025, The Wall Street Journal reported that Walmart and Amazon are actively exploring issuing their own stablecoins. For a retailer processing hundreds of billions in annual transactions, even modest reductions in payment processing costs translate to billions in savings.

Retailer-issued stablecoins would:

• Eliminate interchange fees on transactions
• Generate yield on customer deposits
• Enable instant settlement with suppliers
• Create loyalty mechanics by incentivizing stablecoin usage

The Real Decision Framework

For merchants evaluating stablecoin acceptance, the analysis extends beyond comparing network fees:

• Processor/on-ramp fees: Services like Stripe (1.5%) often dominate the cost structure
• Conversion impact: Does adding stablecoin checkout reduce overall conversion?
• Refund handling: Stablecoins have no native chargeback mechanism
• Treasury operations: Custody, key management, reconciliation, KYT screening
• Working capital value: Faster settlement provides real value for cash-constrained businesses

The strategic conclusion: On-chain fees are almost never the decision driver. The decision is driven by adoption rates, processor economics, refund policies, and operational overhead.

Impact on Consumers

Current Value Proposition

The consumer case for stablecoins currently centers on specific use cases:

Cross-border remittances: The World Bank reports average global remittance costs of 4.26% to send $500 internationally, with costs exceeding 7% for some corridors. Stablecoin remittances can reduce costs to under 1% with settlement in minutes rather than days.

Dollar access in unstable economies: Tether CEO Paolo Ardoino describes USDT as "the biggest financial inclusion success story in the history of humanity." In countries with currency instability, stablecoins provide dollar-denominated value storage without traditional banking relationships.

Crypto trading and DeFi: Over 80% of stablecoin volume involves crypto trading, where stablecoins serve as base pairs and collateral.

Challenges for Mainstream Adoption

For mainstream retail payments, consumer adoption requires solving several challenges:

• Prefunding requirement: Unlike credit cards that extend credit, stablecoin payments require consumers to hold stablecoins before spending
• Loss of credit card benefits: Paying with stablecoins means forgoing cashback, points, and purchase protections
• User experience friction: Managing wallets and understanding blockchain networks remains more complex than swiping a card

Emerging solutions include crypto-linked cards (Coinbase Card, American Express partnership) that allow spending stablecoin balances through traditional card rails.

Regulatory Landscape

The GENIUS Act

On July 18, 2025, President Trump signed the Guiding and Establishing National Innovation for U.S. Stablecoins Act (GENIUS Act)—the first comprehensive federal legislation governing stablecoins in the United States.

Key provisions:

• 100% reserve backing: Stablecoins must be backed 1:1 by U.S. dollars, short-term Treasury bills, or approved liquid assets
• Monthly disclosures: Issuers must publicly disclose reserve composition monthly
• Consumer protections: Stablecoin holders have first priority over all creditors in issuer insolvency
• AML/KYC compliance: Issuers must comply with Bank Secrecy Act requirements
• Not securities or commodities: Payment stablecoins explicitly excluded from SEC and CFTC jurisdiction

The GENIUS Act does not prohibit commercial firms from issuing stablecoins, creating a pathway for potential retailer-issued stablecoins.

Global Regulatory Developments

• European Union (MiCA): Fully effective December 2024, establishing clear rules for stablecoin issuance, custody, and trading
• United Kingdom: FCA developing rules with implementation expected by end of 2025
• Hong Kong: Stablecoin Ordinance passed May 2025, requiring licenses for HKD-backed stablecoin issuers

Future of Payments

Near-Term Trajectory (2025-2027)

• Cross-border B2B payments: BCG estimates stablecoin B2B payments grew 30x from early 2023 to 2025
• Remittance growth: McKinsey estimates stablecoin remittances reached 3% of the $200 trillion global cross-border market
• Bank-issued stablecoins: JPMorgan, Bank of America, Citigroup, and Wells Fargo have reportedly discussed joint initiatives
• Expanded merchant acceptance: The Shopify integration provides a template for other e-commerce platforms

Long-Term Implications

Standard Chartered predicts the stablecoin market could reach $2 trillion by 2028. McKinsey suggests true scaling will require "a shift in the prevailing paradigm that requires most transactions to settle in local currency."

Tether co-founder Reeve Collins predicts that "all currency will be a stablecoin. So even fiat currency will be a stablecoin. It'll just be called dollars, euros, or yen."

Conclusion

The stablecoin revolution is not coming—it is here. With $300+ billion in market capitalization, transaction volumes exceeding traditional card networks, and comprehensive regulatory frameworks now in place, stablecoins have graduated from cryptocurrency curiosity to legitimate financial infrastructure.

The question is no longer whether stablecoins will reshape payments, but how quickly and through which channels. The winners will be those who understand that the real opportunity isn't in the technology itself, but in solving the distribution, incentive, and operational challenges that determine whether technology becomes adoption.

Sources

Market Data

• DeFiLlama Stablecoin Data
• Arkham Intelligence: How Stablecoins Reached $300B (October 2025)
• CoinDesk Stablecoin Market Report (October 2025)
• IMF Crypto Assets Monitor (October 2025)

Tether and Circle

• Tether Q3 2025 Attestation Report
• Decrypt: Tether Reports $10 Billion Profit (October 2025)
• Circle Official USDC Documentation

Visa and Mastercard

• Visa: Visa's Role in Stablecoins (April 2025)
• Visa Press Release: USDC Settlement Launch (December 2025)
• Payments Dive: Mastercard, Visa Play Down Stablecoin Threat (July 2025)

Merchant Adoption

• Stripe Newsroom: Shopify Stablecoin Payments (June 2025)
• Wall Street Journal: Walmart, Amazon Explore Stablecoins (June 2025)

Regulation

• White House Fact Sheet: GENIUS Act (July 2025)
• Congress.gov: S.1582 GENIUS Act
• World Economic Forum: GENIUS Act Global Impact (July 2025)

Cross-Border Payments

• McKinsey: Stablecoins Payment Infrastructure (July 2025)
• IMF: How Stablecoins Can Improve Payments (December 2025)
• FXC Intelligence: State of Stablecoins in Cross-Border Payments (November 2025)