According to the a16z report, stablecoins enable faster, cheaper, and more accessible transactions, benefiting businesses and individuals alike. With clear regulation, a16z says stablecoins have the potential to transform global money transfers, making them open, instant, and borderless, similar to how WhatsApp revolutionised communication.
But, considering the perennial scepticism over the intangible nature of cryptocurrencies and blockchain networks, it’s worth it to take a deep dive into the befuddling world of digital currencies and whether they can truly replace traditional currencies.
What are stablecoins?
Stablecoins are digital currencies designed to maintain a stable value by pegging themselves to traditional assets like the US dollar, euro, or even commodities such as gold. Unlike volatile cryptocurrencies such as Bitcoin or Ethereum, stablecoins aim to offer the benefits of blockchain technology — such as fast, borderless transactions — without wild price fluctuations.
There are three main types:
- Fiat-collateralised: Backed 1:1 by fiat currency reserves held in banks (such as USDT, USDC).
- Crypto-collateralised: Backed by other cryptocurrencies but often overcollateralised to handle volatility (example: DAI).
- Algorithmic: Uses code and smart contracts to control supply and demand, often lacking any underlying reserve (eg, the failed TerraUSD).
Top stablecoins in the world (by market capitalisation)
As of 2025, these are among the most significant stablecoins in circulation:
- Tether (USDT, $144 billion): Pegged to the US dollar. It is the most widely used and has the highest market cap.
- USD Coin (USDC, $60 billion): Issued by Circle and backed by dollar reserves. Popular among regulated institutions.
- DAI ($3.13 billion): Decentralised and backed by crypto assets via the MakerDAO protocol.
- TrueUSD (TUSD, $494.2 million): Fiat-collateralised and known for transparency of its reserves.
- PayPal USD (PYUSD, $835 million): Issued by PayPal, aimed at consumer-facing use cases.
- Binance USD (BUSD, $58.42 million): Pegged to the dollar, issued by Paxos but no longer actively supported by Binance.
- sUSD ($27.12 million): Backed by synthetic assets on the Synthetix platform.
- GUSD (Gemini Dollar, $51 million): Issued by Gemini exchange, targeting a more compliant and regulated user base.
- EURC (Euro Coin, $199 million): Issued by Circle and pegged to the euro.
- Tether Gold (XAUT, $796 million): A gold-backed token by the Tether team, representing one troy ounce of gold.
Political leanings of major backers
The ecosystem around stablecoins spans tech firms, fintech entrepreneurs, venture capitalists, and occasionally, legacy financial players. Their political affiliations often lean towards policies that favour deregulation, crypto innovation, and limited government oversight.
- Circle (USDC): Its CEO Jeremy Allaire has historically supported regulatory clarity but maintains relationships with US policymakers across party lines. Circle tends to align with moderate-centrist policy platforms, especially those supportive of financial innovation.
- Tether (USDT): Operated by a group linked to Bitfinex, Tether’s team keeps a low public political profile. Its operations are often regarded as opaque, and it has faced legal action from regulators in multiple jurisdictions. It is often supported by libertarian-leaning crypto investors who champion decentralised finance.
- PayPal (PYUSD): A publicly-listed company with traditional corporate lobbying structures, PayPal’s involvement in stablecoins is seen more as a commercial expansion than a political stance. However, its executives often support centrist and centre-left policies on innovation and consumer protections.
- Andreessen Horowitz (a16z): A major backer of decentralised stablecoins like DAI and projects surrounding them. The firm has spent millions on lobbying for Web3-friendly legislation and tends to back libertarian and pro-tech regulation candidates, mostly on the American right and centre-right. The fund’s co-founders Marc Andreesen and Ben Horowitz backed Donald Trump in the 2024 election.
- Gemini (GUSD): Run by the Winklevoss twins, who have donated to libertarian and centre-right causes in the US. They advocate for self-sovereignty in finance and reduced state interference in digital asset markets.
These leanings shape how stablecoin providers respond to proposed regulations, with some pushing for full compliance and others resisting government involvement in decentralised systems.
Can stablecoins replace SWIFT or serve as a global currency?
In theory, yes. SWIFT is a messaging protocol that coordinates international payments between banks. It does not move money itself; rather, it ensures secure communication between financial institutions. Stablecoins can bypass this system by enabling direct, near-instant value transfers across borders, without the need for intermediary banks or lengthy settlement times.
Projects like Ripple (XRP), though not a stablecoin, have pushed for blockchain-based cross-border settlement systems. However, stablecoins could fulfil this function even more effectively due to their stable pricing, especially when backed by fiat currencies. USDC and USDT are already used for remittances and international B2B payments in some regions.
That said, scaling this system globally would require massive regulatory cooperation and upgraded banking infrastructure, which could take years.
Becoming a global currency?
The idea of a single global currency has long fascinated economists. Stablecoins bring this vision closer, but significant hurdles remain.
- Regulatory fragmentation: Different jurisdictions view stablecoins differently — as securities, commodities, or even unauthorised currencies.
- Dollar dominance: Most stablecoins are pegged to the US dollar, reinforcing its hegemony rather than replacing it. True global adoption would require a basket-backed or multi-currency approach (like the idea behind Facebook’s failed Libra project).
- Trust in issuers: Without global oversight, trust in private firms like Tether or Circle is not guaranteed. Central bank digital currencies (CBDCs) may offer governments a counterweight to privately-issued stablecoins.
- Geopolitical tensions: Countries like China and Russia are developing digital currency alternatives to reduce dependency on the dollar and systems like SWIFT. This could fragment adoption rather than unify it.
Still, stablecoins are already functioning as de facto global currencies in some parts of the world where local currencies are highly volatile or where access to US dollars is limited.
In conclusion
Stablecoins are a foundational part of the digital asset ecosystem and have evolved from simple dollar substitutes to tools with global relevance. Though their potential to replace SWIFT or act as universal currencies is still uncertain, their influence in international payments is growing. The political ideologies of their creators and backers, ranging from libertarian to centrist, will likely shape how these instruments evolve — and how governments around the world choose to respond.
Also read: Donald Trump signs bill to nullify expanded Internal Revenue Service crypto broker rule