These developments show stablecoins are bridging traditional finance and crypto. Stablecoin transfer volume reached $27.6 trillion in 2024, surpassing Visa and MasterCard combined. Major issuers like USDT and USDC now hold hundreds of billions in circulation. Stablecoins are no longer “just crypto playthings”. They work like digital dollars on blockchain, making quick global payments possible. For traders and investors, stablecoins have become a key part of the financial system.
As USDT market trends continue to evolve, stablecoins play a larger role in crypto finance. Next up, we'll break down what stablecoins are, how traders use them, and the risks and rules coming up.
What Is a Stablecoin? A Beginner’s Guide to Stablecoins
A stablecoin is a type of cryptocurrency that aims to keep its value steady. Usually, each stablecoin is linked to another asset (usually a fiat currency like the U.S. dollar). For example, each USDT (Tether) or USDC is meant to stay worth one dollar. They do this by keeping reserves of real assets to support each token. Basically, think of a stablecoin like a prepaid digital gift card filled with dollars: when you use it, it stays at $1.
Fiat-backed coins like USDT and USDC are usually the most stable. They keep dollars in bank accounts and often show audits to prove it. Crypto-backed coins can lose value if the crypto they’re tied to drops in price. Algorithmic coins can be dangerous.
Why Do Stablecoins Matter for Forex and CFD Traders
Stablecoins are popular among traders and brokers worldwide because they allow for instant and cheap money transfers across borders without going through traditional banks. Platforms like Binance or BTCDana often let users deposit and withdraw using stablecoins. Traders in countries with weak currencies use stablecoins as digital “dollar wallets” to keep their value safe and access global markets.
Stablecoins make it easier to access funds. Traders can move money in and out of crypto/CFD markets globally at any time, trading with USDT to capitalize on opportunities without delay.
Are Stablecoins Really Stable? Lessons from the UST Crash
Stablecoins are supposed to stay at $1, but history shows that not all designs are safe. TerraUSD was an algorithmic stablecoin: it kept its peg by minting or burning its sister token LUNA. In May 2022, a crypto market shock led to a UST crash. People holding UST quickly swapped it for LUNA, causing LUNA’s price to plummet to nearly zero and UST to drop way below $1. This chain reaction wiped out over $40 billion in just a few days.
Stablecoin risks: The stability of a stablecoin depends entirely on its design and collateral. Coins with 100% traditional reserves (like USDC, theoretically redeemable 1:1 for dollars) held up during stress, while purely algorithmic stablecoin schemes can fail. In reality, always check how a stablecoin is backed and audited before assuming it’s safe.
How Does Tether Make $1B+ From Interest? The Yield Model of Stablecoins
For example, a recent Reuters report found that about 80% of stablecoin reserves, including USDT reserves ($200 billion), are held in U.S. Treasury bills or repos. Tether earnings alone report about $120 billion in U.S. Treasuries. In Q1 2025, Tether recorded well over $1 billion in operating profit.
In short, stablecoins borrow dollars and lend them out to the government, making money from the spread (aka Stablecoin interest). But it also means stablecoins sit at the intersection of crypto and traditional finance.
The Road Ahead for Stablecoins
Stablecoins have come a long way from being just crypto curiosities to becoming an essential part of the financial system. They are bridging traditional finance and decentralized finance, letting traders move money quickly and giving consumers access to a "digital dollar" from just about anywhere. But this new landscape is still being figured out.
For traders and finance pros, mastering stablecoins is now a core skill. You need to know which coin you’re using and how it’s backed. Understand that stablecoin future depends on design, and value on the global stage depends on laws and geopolitical shifts.
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