The U.S. will support stablecoins: what will change in the crypto market?

In early 2025, the global cryptocurrency market experienced one of its most significant turning points. U.S. President Donald Trump signed an executive order cementing support for U.S. dollar-backed stablecoins. This event triggered a strong reaction in the market, with the capitalization of leading stablecoins such as USDT and USDC rising 15% in the first two weeks of February.

Interest in the regulation of digital assets is growing not only in the U.S. but around the world. According to a study by Boston Consulting Group, by 2030, the market for stablecoins could reach $2.8 trillion, representing more than 15% of the global money supply in circulation. Despite this, many countries have yet to decide on a regulatory framework for dealing with digital assets. The U.S., on the other hand, has taken a decisive step by choosing to support private stablecoins instead of developing its own central bank digital currency (CBDC).

However, such measures are causing much debate among crypto industry economists and representatives. Some believe that support for stablecoins will strengthen the dollar's dominant position in the global economy. In contrast, others warn that abandoning a national digital currency could lead to the loss of U.S. leadership in the international financial system.

Contents of the executive order

The signed executive order, entitled "Strengthening U.S. Leadership in Digital Finance," contains several key provisions:

Promoting dollar-backed stablecoins: the document emphasizes the need to promote the development and growth of U.S. dollar-backed stablecoins to reinforce the national currency's global dominance. As of the end of January 2025, the largest dollar-backed stablecoins are USDT from Tether and USDC from Circle, with market capitalizations of $139 billion and $52 billion, respectively.
Creation of a digital asset working group: the executive order provides for forming a Presidential Working Group on Digital Asset Markets that will develop a federal regulatory framework to govern the issuance and operation of digital assets, including stablecoins. The group will include the secretary of the Treasury, the attorney general, the chairman of the SEC, and other senior officials. They are tasked with submitting regulations on digital assets within 180 days and assessing the prospects for a national digital asset reserve.
Ban on the creation of central bank digital currencies (CBDCs): the document prohibits the creation, issuance, and use of CBDCs within U.S. jurisdiction, arguing to protect the dollar's sovereignty and prevent potential risks associated with government-issued digital currencies.

Potential impact on the cryptocurrency market

Adopting this decree could have a multifaceted impact on the cryptocurrency market. Among the positive effects, it is worth noting the strengthening of confidence in stablecoins: The U.S. government's official support for dollar-backed stablecoins could further increase investor and user confidence in these digital assets. As of the end of 2024, the stablecoin market has shown significant growth. The total market capitalization of stablecoins has reached a record $191.6 billion, up 47% from $130 billion at the beginning of the year.

A clear regulatory framework and government support for stablecoins could encourage institutional investors to participate actively in this market. On February 4, 2025, Republican Senator Bill Hagerty introduced a bill to create a regulatory framework for stablecoins. The bill, titled the Guidance and Establishment of National Innovation for U.S. Stable Coins (GENIUS Act), aims to develop clear and flexible rules for issuers of stablecoins, which could help attract large investors.

It should also be noted that the ban on CBDC creation in the U.S. could lead to increased competition with other countries developing their central bank digital currencies. In this context, dollar-backed stablecoins could become a tool to preserve and strengthen the dollar's international role. However, some experts believe that the absence of its own CBDC could weaken the U.S. position in the global financial system.

In the long term, U.S. initiatives to regulate stablecoins may serve as an example for other countries and international organizations, forming global standards and approaches to regulating digital assets. This could lead to more coordinated efforts to regulate cryptocurrencies internationally.

Although Trump's executive order aims to strengthen its position, it also carries several potential risks and negative consequences for the cryptocurrency market. Let's look at aspects of the post-decision's negative impact of this.

Sed reliance on private companies and centralization of stablecoins

One of the main problems could be the increased dominance of a few private companies, such as Tether (USDT) and Circle (USDC), in the global digital asset market. Currently, USDT controls 70% of the stablecoin market, while USDC holds about 22%. If U.S. regulation is focused solely on supporting these stablecoins, it could lead to monopolization of the sector and increased risks for the entire ecosystem.

In the event of crises or regulatory conflicts, the policies of private issuers could influence international financial systems, jeopardizing the crypto market's decentralized nature.

Risks to global confidence in the dollar and possible responses from other countries

The U.S. rejection of creating a central bank digital currency (CBDC) and relying solely on private stablecoins could lead to adverse reactions from economic giants such as China, the European Union, India, and BRICS.

Example: China is already actively developing its digital currency (e-CNY), which has processed more than $1.4 trillion in transactions by the end of 2024. If the U.S. continues to focus only on private stablecoins, other countries may increase support for their national CBDCs and restrict the use of dollar-based stablecoins within their territories. This could weaken the dollar's global influence, especially in developing countries.

In the long term, this could lead to a division of the global financial system, with some countries using private stablecoins (USDT, USDC) and others using national CBDCs (digital yuan, digital euro, digital ruble). This will create financial fragmentation, complicate international transactions, and increase geopolitical tensions.

Increased regulatory scrutiny and possible restrictions on users

Despite the declarative support for cryptocurrencies, the new decree could lead to increased regulation of stablecoins and create new restrictions for their users. For example:

Possible restriction of anonymous transactions (mandatory identity verification for transfers via stablecoins).
Strengthening controls on smart contracts and blockchain protocols related to issuing and using Stablecoins.
Prohibiting using unlicensed wallets and decentralized exchanges (DEXs) for stablecoin transactions.

Such measures may restrict users' access to stablecoins, especially in countries with strict financial policies. This could provoke a massive flight of capital to alternative cryptocurrencies (e.g., decentralized stablecoins such as DAI), which would reduce the effectiveness of regulation.

Potential risks of financial instability

If the U.S. government relies on developing private stablecoins instead of CBDC, additional financial instability risks would be created. For example:

If Tether or Circle encounters liquidity problems, it could trigger a market panic similar to the Terra (UST) collapse in 2022, when the stablecoin lost its peg to the dollar and caused a $60 billion market crash.
A sudden change in U.S. regulatory policy could lead to a massive withdrawal of funds from the crypto market and panic among institutional investors. For example, in 2023, the banking crisis in the U.S. caused a temporary drop in the value of USDC when its reserves of $3.3 billion hung in the bankrupt Silicon Valley Bank (SVB). If such events are repeated on a larger scale, it could trigger a new wave of instability in the crypto market.

Restricting the development of innovative projects

The new GENIUS Act bill aimed at regulating stablecoins could exclude startups and small crypto projects that cannot meet the latest stringent requirements from competition.

High reserve requirements (e.g., mandatory deposits in U.S. Treasury bonds) may make the launch of new stablecoins financially unaffordable for small development teams.
Increased reporting to regulators may create an excessive bureaucratic burden, slowing the development of innovative projects in the crypto industry.

This could lead to market centralization and reduced competition, as only large companies can comply with the new standards.

Conclusion

Despite all the concerns, so far the market has reacted positively to the decree. For example, the Bitcoin (BTC) exchange rate has shown growth, surpassing the $100,000 mark, due to expectations of more favorable regulation and attracting new investors.

Cryptocurrency companies and associations supported the U.S. administration's initiatives, noting the importance of creating a predictable and transparent regulatory environment. Nathan McCauley, CEO of Anchorage Digital, said, "This executive order is a significant step forward in creating clear and consistent rules for digital assets."

Experts say that creating a clear regulatory framework could attract large institutional investors to the cryptocurrency market. As of the end of 2024, the total assets under management of cryptocurrency investment funds reached $72.3 billion, up 36% year-on-year. This figure is expected to grow with the introduction of new regulations.