Introduction to Stablecoins
The global stablecoin market is experiencing a surge in growth in 2025, with major institutional investors such as SoftBank and ARK Investment showing interest in infrastructure players like Tether. This rapid expansion is driven by the increasing adoption of stablecoins, which are digital currencies pegged to the value of traditional currencies like the US dollar.
Tether’s Expansion and Investor Interest
Tether, a leading stablecoin issuer, is reportedly exploring a $20 billion funding round that could value the company at around $500 billion. This move is seen as a significant development in the stablecoin market, as it reflects the growing confidence of institutional investors in digital asset infrastructure. Cantor Fitzgerald, a shareholder in Tether, is advising on the potential transaction. If completed, the round would mark Tether’s most extensive search for external capital yet.
Institutional Investment in Stablecoins
SoftBank and ARK Investment Management are in talks to join a major funding round for Tether Holdings. The deal could value the company at up to $500 billion, with Tether aiming to raise $15-20 billion by selling around 3% of the firm. Backing from SoftBank and ARK would give Tether fresh momentum and further solidify its position as a leader in the stablecoin market. Supported by large US Treasury holdings and a growing Bitcoin reserve, Tether has emerged as one of the most profitable firms in crypto, posting $4.9 billion in net income in Q2 2025.
Growth of the Stablecoin Market
The stablecoin sector is undergoing an explosive growth phase in 2025, driven by unprecedented institutional adoption and emerging regulatory clarity worldwide. According to analysis cited in Coinbase’s August report, the total market capitalization of stablecoins has surged, reaching over $275 billion. Some analysts project the market could reach $1 trillion by 2028. This growth is fueled by the stablecoins’ utility in cross-border payments, which are used for over 43% of B2B transactions in Southeast Asia.
Adoption of Stablecoins by Institutions
A Fireblocks survey indicated that 90% of surveyed institutions are now taking action on stablecoin integration, embracing them for treasury management and international settlement. Beyond Tether’s ambition, other major players are reshaping the landscape. Nine major European banks have joined forces to launch a MiCA-compliant euro-denominated stablecoin, and companies like Finastra have partnered with Circle to integrate stablecoins into bank payment flows.
Regional Developments in Stablecoins
The movement is gaining momentum in Asia as well. South Korea’s major financial institutions are deeply engaged in preparing for the stablecoin era, aggressively pursuing a "Two-Track Strategy" involving both internal development and strategic partnerships to launch their own Korean Won-backed stablecoins. A group of at least eight major banks is reportedly forming a consortium to create a joint venture and infrastructure specifically for the co-issuance of a Won-backed stablecoin.
Financial Risks Associated with Stablecoins
A new report from Moody’s Ratings warns that digital currency ownership has surged globally, reaching 562 million people by 2024, up 33% from the previous year. Emerging markets in Southeast Asia, Africa, and Latin America are leading adoption, often using cryptocurrencies for inflation hedging, remittances, and financial inclusion. The rapid expansion of stablecoins introduces systemic vulnerabilities, including reduced central banks’ control over interest rates and currency stability, a trend termed "cryptoization." Banks may experience deposit erosion as savings shift into stablecoins or crypto wallets, and underregulated reserves could trigger liquidity runs requiring government intervention.
Regulatory Frameworks for Stablecoins
However, uneven regulatory frameworks leave countries exposed. Advanced economies are beginning to regulate stablecoins more rigorously, with Europe implementing MiCA and the US passing the GENIUS Act, while Singapore applies a tiered framework. In contrast, many emerging markets lack comprehensive rules, and fewer than one-third of countries have full-spectrum regulation in place.
Conclusion
In conclusion, the stablecoin market is experiencing rapid growth, driven by increasing institutional adoption and emerging regulatory clarity. While this growth presents opportunities for financial inclusion and innovation, it also introduces financial risks and regulatory challenges. As the market continues to evolve, it is essential for regulators and institutions to work together to establish comprehensive frameworks that balance innovation with stability and security. With the total market capitalization of stablecoins projected to reach $1 trillion by 2028, the stablecoin market is likely to play an increasingly important role in the global financial system.
