In the digital age, financial infrastructure is being quietly rebuilt—block by block, line by line. At the center of this transformation are stablecoins: cryptocurrencies pegged to fiat currencies like the US dollar. These instruments are evolving from speculative tools into key enablers of cross-border transactions, liquidity access, and programmable finance.
Once limited to niche use cases within crypto exchanges, stablecoins now facilitate remittances, trade finance, and even payroll in regions grappling with inflation or capital controls. In countries like Turkey, Argentina, Lebanon, and Nigeria, stablecoins have emerged as lifelines, used not for speculation but to preserve value, settle cross-border transactions, and access USD liquidity. These developments are detailed in HTX Ventures’ report, “The On-Chain Extension of the Dollar: Stablecoins, Shadow Banking, and the Reshaping of Global Payment Power.”
This shift is not only behavioral. It’s also structural. As capital moves on-chain, the architecture of money is being reimagined. Processes that once relied on correspondent banks and SWIFT messages can now be handled by smart contracts and decentralized protocols, reducing costs and settlement times while improving transparency.
Programmable value and financial coordination
Beyond speed and cost, programmability is reshaping how financial coordination works. Stablecoins can be embedded in smart contracts to automate compliance, escrow, and interest payouts. For small businesses and startups, this introduces financial tools once reserved for large institutions.
Platforms like Aave, Compound, and Curve have developed into decentralized money markets where stablecoins can be lent, borrowed, or swapped without intermediaries. This disintermediation not only improves efficiency but also demands new models of trust, such as on-chain proofs, reserve attestations, and real-time audits.
“Shadow liquidity” and systemic risk
As stablecoins scale, they bring “shadow liquidity” into the global system. This refers to currency that moves outside traditional banks, circulating via wallets, protocols, and APIs, often backed by real-world assets (RWAs) such as short-term sovereign treasuries. Their growing use as collateral, yield instruments, or restaking assets introduces a layered risk structure, akin to those in the shadow banking system, but with greater transparency.
Transparency, however, doesn’t represent immunity. Issues like overcollateralization, smart contract vulnerabilities, and cascading liquidations still exist and are sometimes amplified by protocol composability. To enable stablecoins to operate at global scale, systemic safeguards must evolve accordingly. This includes standardized audits, circuit breakers, and insurance mechanisms to absorb shocks during periods of stress.
HTX Ventures notes that, despite improved visibility into smart contracts, new risks can arise from cross-chain bridges and dependencies across decentralized finance (DeFi) protocols. These structures require guardrails similar to those found in traditional finance, built not on paper but in code.
A global patchwork of regulation
Globally, stablecoin regulation remains uneven. In the US, the proposed “GENIUS Act” is a bipartisan attempt to create a unified framework for stablecoin issuance. It mandates 1:1 reserve backing in cash or short-term US treasuries, real-time audit disclosures, and restricts algorithmic or uncollateralized stablecoins. This marks a step toward integrating stablecoins into the formal financial system.
In Europe, the “MiCA” framework requires capital buffers and 100% reserve backing, along with oversight and thresholds for systemically significant tokens. Asia presents a varied picture: Singapore has implemented licensing for stablecoin issuers, with audit and redemption requirements. Hong Kong is trialing regulatory sandboxes, and Japan mandates stablecoins to be issued via licensed banks or trust companies. By contrast, Nigeria has warned against stablecoin use, citing concerns over monetary sovereignty.
For builders and investors, this patchwork creates both regulatory risk and first-mover advantages. Projects that align early with emerging rules may benefit from institutional preference and payment provider partnerships.
Stablecoins as a wedge into real-world utility
As digital value flows increase, stablecoins stand at the convergence of crypto-native features and practical utility. They support dollar settlement in emerging markets and provide tokenized treasury access for global investors. These applications span industries and geographies.
One signal of stablecoins’ shift toward the mainstream is the public listing of Circle, issuer of USDC. As the first major stablecoin issuer going public, Circle may bring greater visibility and credibility to the sector, strengthening USDC’s role in enterprise payments, fintech platforms, and tokenized asset infrastructure.
This expansion isn’t happening in isolation. It is part of a broader shift toward decentralized infrastructure with institutional-grade features. As RWAs, central bank integrations, and compliance-focused models of “centralized decentralized finance” (CeDeFi) develop, stablecoins are becoming the connective layer between legacy financial systems and emerging digital economies.
The future won’t be defined by code alone. It will depend on navigating policy, building trust, and designing systems that scale responsibly. In that sense, stablecoins may become more than just a payment tool—they could form the foundation for how value is moved, settled, and grown in a digitized world.
This article was published in partnership with HTX Ventures.
About the author: This article is authored by Alec Goh, head of HTX Ventures, the global investment arm of HTX, one of the world’s largest cryptocurrency exchanges. Goh leads strategic investments in high-potential digital asset projects, with a focus on infrastructure, compliance-first DeFi, and stablecoin ecosystems. Previously, he spearheaded the firm’s M&A and investment efforts, contributing to its global expansion and some of the industry’s most notable exits. With a background in global finance and deep experience in structured transactions, Goh bridges institutional capital with the next generation of Web3 innovation.