Once relegated to niche use cases within crypto exchanges, stablecoins are now powering remittances, trade finance, and even payroll in regions facing inflation or capital restrictions. In markets 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 U.S. dollar liquidity, as highlighted in HTX Ventures’ report “ The On-Chain Extension of the Dollar: Stablecoins, Shadow Banking, and the Reshaping of Global Payment Power.”
This shift isn’t just behavioral – it’s architectural. As capital flows move on-chain, the infrastructure of money itself is being reconstructed. What was once routed through correspondent banks and SWIFT messages now occurs via smart contracts and decentralized protocols, reducing costs and settlement times while increasing transparency.
Programmable value and financial coordination
Beyond speed and cost, programmability is redefining the logic of finance. Stablecoins can be embedded into smart contracts that automate compliance, escrow, and interest payouts – unlocking new coordination mechanisms for capital. For small businesses and startups, this means access to financial tools previously reserved for large institutions.
Platforms like Aave, Compound and Curve have grown into decentralized money markets, enabling the lending, borrowing, and swapping of stablecoins without intermediaries. This disintermediation not only enhances efficiency but also demands new forms of trust – leading to the rise of on-chain proofs, reserve attestations, and real-time audits.
The emergence of “shadow money” and systemic risk
As stablecoins scale, they also introduce shadow liquidity into the global system. These are dollars that exist outside the traditional banking sector – circulating via wallets, protocols and APIs, yet backed by real-world assets (“RWA”) like short-term sovereign treasuries. The growing use of stablecoins as collateral, yield instruments, or restaking assets introduces a layered risk structure – similar in spirit to the shadow banking system, albeit with greater transparency.
But transparency is not immunity. Risks such as over-collateralization, smart contract exploits, and cascading liquidations still exist – and are often amplified by protocol composability. For stablecoins to reach global-scale utility, systemic risk safeguards must evolve in tandem. This includes standardized audits, circuit breakers, and insurance mechanisms that can contain shocks in extreme scenarios.
HTX Ventures also point out that, despite improved visibility into smart contracts, new systemic risks arise from cross-chain bridges and complex dependencies across DeFi protocols. These structures require guardrails equivalent to those found in traditional financial markets – built in a new language: code.
A global patchwork of regulation
The regulatory outlook remains fragmented. In the U.S., the recently proposed GENIUS Act represents a bipartisan effort to establish a clear and unified framework for stablecoin issuance. The bill mandates 1:1 reserve backing in cash or short-term U.S. Treasury, real-time audit disclosures, and restricts algorithmic or uncollateralized stablecoins – marking a significant step toward integrating stablecoins into the formal financial system.
Meanwhile, Europe’s MiCA framework mandates capital buffers and 100% reserve backing, along with enhanced oversight and thresholds for “significant” tokens. Across Asia, approaches vary. Singapore has introduced licensing schemes for stablecoin issuers, focusing on reserve audits and redemptions. Hong Kong is developing regulatory sandboxes, while Japan requires stablecoins to be issued through licensed banks or trust companies. In contrast, Nigeria has issued strong warnings against stablecoin use, citing financial sovereignty concerns.
For builders and investors, this patchwork creates both regulatory risk and first-mover opportunity. Projects that preemptively align with emerging standards may find themselves favored by institutions and payment providers.
Stablecoins as a wedge into real-world utility
As value flows become increasingly digital, stablecoins offer a rare convergence of crypto-native features and real-world utility. From dollar settlement in emerging markets to tokenized U.S. Treasury rails for global investors, their use cases are rapidly expanding across industries and continents.
One notable signal of stablecoins moving closer to the mainstream is the public listing of Circle, the issuer of USDC. As the first major stablecoin issuer going public, Circle brings added visibility and credibility to the sector, helping bridge regulatory compliance and institutional adoption. This milestone reinforces USDC’s positioning as a transparent and regulated stablecoin – frequently used in enterprise settlements, fintech platforms, and increasingly in tokenized asset rails.
This expansion isn’t happening in isolation. It’s part of a broader shift toward decentralized infrastructure with institutional-grade guardrails. As RWA, central bank integrations, and compliance-focused Centralized Decentralized Finance (“CeDeFi”) evolve, stablecoins are becoming the connective tissue between the traditional and decentralized economies.
The future won’t be defined solely by code, but by those who can navigate policy, build trust, and design systems that scale responsibly. In that sense, stablecoins are not just a payment tool – they are a foundational layer for reimagining how value moves, settles, and grows in a digitized world.
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. Alec leads strategic investments in high-potential digital asset projects, with a focus on infrastructure, compliance-first DeFi, and stablecoin ecosystems. Prior to this, he spearheaded M&A and investment efforts at HTX Ventures, contributing to the firm’s global expansion and some of the industry’s most notable exits. With a background in global finance and deep experience in structured transactions, Alec bridges institutional capital with the next generation of Web3 innovation.
The post first appeared on HTX Square.
