Stable coins: a new megatrend?

Stable coins are currently one of the hottest topics in the crypto and financial sector. The US company Circle, an issuer of stable coins, debuted on the New York Stock Exchange on June 4 at a price of $31. In just 12 trading days, the price climbed by almost 900% to $300 before a correction set in. Stocks that are somehow related to this topic were also able to make significant gains.

Stable coins combine the advantages of blockchain technology with the stability of traditional currencies and have the potential to permanently change payment transactions, the financial ecosystem and the financial infrastructure. But what is behind stable coins, what types are there, and why and where are they relevant? These are questions I would like to answer in this blog.

What are stable coins?

Stable coins are a special form of cryptocurrencies whose value is pegged to stable assets such as fiat currencies (e.g. US dollars, euros, Swiss francs, etc.), precious metals (e.g. gold) or other financial instruments. The aim is to avoid the high volatility of traditional cryptocurrencies such as Bitcoin and thus create a reliable digital alternative for everyday transactions. Stable coins can be seen as a bridge between the traditional financial world and the blockchain-based economy. They enable fast and inexpensive payments (especially for international transactions) and offer a safe haven in the volatile crypto market.

The idea behind Stable Coins

The basic idea is simple: while cryptocurrencies such as Bitcoin or Ether have strong price fluctuations, stable coins should retain a fixed value. This makes them attractive for payment transactions, as a store of value and as a basis for other blockchain applications. Even though stable coins for payment transactions are still in their infancy, the market is already worth over €200 billion today. Emerging markets, above all Latin America, but also Africa, are leading the way.

This is hardly surprising, as many countries are struggling with weak local currencies and high transaction costs. In addition, many citizens do not have access to a bank but can transfer cryptocurrencies via mobile devices. When local currencies are under severe depreciation pressure, a stable coin pegged to the US dollar or euro is very welcome as a store of value.

Stable coins were created for the following purposes:

• Price and value stability: minimizing price fluctuations
• Efficient transactions: Fast, low-cost and cross-border payments
• Integration in DeFi: Basis for decentralized financial applications (e.g. banking)
• Protection against inflation: Especially in countries with unstable currencies (e.g. Argentina, Venezuela, Turkey, …)
• Access to digital financial services: Inclusion of people with no or difficult banking access

What types of stable coins are there?

Stable coins can be roughly divided into four categories, depending on how they secure their value:

Type	Description	Examples
Fiat-backed	1:1 covered by fiat currencies (e.g. USD, EUR, …) (bank deposits, government bonds)	USDT, USDC, EURC
Crypto-secured	Secured by cryptocurrencies, often organized decentrally	DAI, sUSD
Commodity-backed	Covered by physical assets such as gold or real estate	PAXG, XAUT
Algorithmic	Price stability through algorithms and smart contracts (without physical cover)	USDe, former UST (LUNA)

Algorithmic stable coins are no longer permitted following regulation in both Europe and the USA. This is intended to protect investors after some algorithmic stable coins collapsed worthless (e.g. Terra with the token Luna). Although they still exist, they cannot be traded against fiat currencies on any crypto exchange.

A distinction is also made between the issuers:

• The company

Companies place stable coins on a blockchain. As collateral, they hold bonds or bank deposits in a ratio of at least 1:1.

• DAO (decentralized autonomous organizations)

Participants on a blockchain can issue stable coins via a decentralized protocol and must deposit cryptocurrencies in return. However, this is in relation to the issue of well over 100%.

• Central banks

Many central banks are currently working on a concept for introducing digital currencies. From today’s perspective, however, it is unclear how these CBDCs (central bank digital currencies) will be structured, whether for private investors or between commercial banks. CBDCs are the safest form of stablecoins, as a central bank is always able to exchange the equivalent value of a stablecoin for the corresponding fiat currency.

Why are stable coins a hot topic right now?

Stable coins are experiencing a real boom in 2025. This was triggered primarily by regulatory security:

MiCA (Markets in Crypto Assets)

Stable coins are a focal point of European crypto regulation. The EU distinguishes between e-money tokens and asset referenced tokens. E-money tokens are linked to a single fiat currency. They must be issued by an EU-licensed e-money institution and meet strict requirements for transparency, reserve coverage and consumer protection. If the token is pegged to an EU currency, at least 60% of the collateral must be deposited with EU banks.

Asset referenced tokens are backed by a basket of assets, e.g. several currencies, commodities or cryptocurrencies. Strict licensing requirements also apply here. Decentralized stable coins such as DAI from MakerDAO do not meet the regulatory requirements of the EU, as MiCA stipulates that stable coins may only be issued by legal entities with a registered office in the EU and a corresponding license.

GENIUS Act

The law still has to be passed by the House of Representatives. In the USA, too, only “permitted payment stablecoin issuers” will be allowed to issue stablecoins. The legal certainty thus supports issuers of stable coins backed by 100% fiat or bonds. Crypto-backed stablecoins are not prohibited per se, but will no longer be accepted by any crypto exchanges in the US or Europe. The current US government strongly supports stable coins and rules out the issuance of CBDC by the FED. They see issuers as important buyers of Treasuries.

Which companies have or are planning a stable coin issue?

Tether Limited (USDT): market leader, but does not meet the EU’s transparency requirements and is therefore not licensed in Europe

Circle (USDC, EURC): first global stable coin issuer to comply with EU MICA regulation

DWS, GalaxyDigital, FlowTraders: jointly launch a fully regulated euro stable coin.

ING Bank: Working on its own euro stable coin

PayPal: Mit PYUSD im Stable-Coin-Markt präsent

In addition, companies such as Amazon and Walmart are testing their own stable coins. The main intention behind this is to save on international transaction fees.

Which companies can you invest in?

The company	Listed on the stock exchange	Focus/ Stable Coin	Special feature
CIRCLE	Since 4.6.2025	USDC, EURC	MiCA compliant
Coinbase	Yes	Participation in USDC, 14-15% turnover with stable coins	wird vom Stable-Coin-Handel begünstigt
DWS	Yes	Euro Stable Coin	Joint venture with Galaxy Digital
Galaxy Digital	Yes (Canada)		Führender Krypto-Asset-Manager
Flow Traders	Yes (NL)		Marktführer im Market Making
PayPal	Yes	PYUSD	Einstieg
Gemini	planned	Stable Coins	IPO in preparation

Conclusion

Stablecoins are much more than a short-term hype. They are the foundation of the tokenised economy and have the potential to fundamentally change payment transactions, investment and financial markets. With new regulations in the EU and the US and the entry of major banks and tech companies, the topic is more relevant than ever. The next few years will show whether stablecoins can fulfil their disruptive potential – or whether they will remain a niche phenomenon. One thing is clear: anyone who wants to understand and help shape the digital financial world of tomorrow will have to get to grips with stablecoins.

 

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