The Four-Way Struggle in the Stablecoin Market

In recent years, with the passage of the GENIUS Act in the United States, the stablecoin industry has ushered in a new development trend. This act establishes clear rules for the stablecoin market, requiring reserves to be fully backed 1:1, setting a regulatory watershed of $10 billion, and prohibiting the direct payment of interest, among other stipulations. In this new environment, four major forces are fiercely competing for dominance in the digital dollar.

Compliance Honor Roll Alliance

The alliance centered around USDC issued by Circle is a model in the stablecoin market. They strictly adhere to regulatory requirements, with reserves primarily consisting of U.S. Treasury bonds and cash, and publish detailed audit reports monthly. This practice has earned the trust of regulators and institutional investors.

However, there are some contradictions between Circle and its main distributor Coinbase. As a strong channel provider, Coinbase takes away most of the profits and even sets many restrictive clauses in the contract. In order to break free from its dependence on Coinbase, Circle has chosen to go public to gain more funding and independence.

Offshore Empire

The alliance centered around Tether's USDT is currently the largest stablecoin by market capitalization. They have achieved remarkable profitability by adopting a high-yield investment strategy and a low-channel cost model. In the face of challenges from new legislation, Tether has implemented a dual-track strategy, planning to maintain the existing USDT services for the global market while developing a fully compliant new stablecoin for the U.S. market.

USDT has a close partnership with the TRON network, with over 50% of USDT circulating on TRON. Additionally, Tether has a strong political background and collaborates with Wall Street giant Cantor Fitzgerald to gain a certain level of political support.

Political Elite Group

The alliance centered around the USD1 stablecoin is a powerful combination of politics and capital. This alliance is closely related to certain political families and has gained significant political influence. A large exchange acts as a distribution giant, providing a robust distribution network for USD1. An investment from a state-owned investment institution in the UAE has facilitated the promotion of USD1 on trading platforms.

This "top-down" market expansion strategy is fundamentally different from the traditional development path of cryptocurrencies. It quickly creates huge application scenarios and market demand through political influence and large-scale transactions at the sovereign level. However, this business model, which is highly dependent on political relationships, also faces uncertainties brought about by political changes.

The Counterattack of Traditional Banks

Traditional financial institutions are also beginning to enter the stablecoin market. Although the deposit token launched by a large bank is not legally a stablecoin, it has advantages such as earning interest, high creditworthiness, and clear regulation. This deposit token is primarily aimed at institutional clients and provides services for inter-institutional settlements.

Other large banks are also exploring the issuance of their own deposit tokens and even considering forming bank alliances to create shared, interoperable digital currencies. This is a collaborative defensive action taken by the banking industry to prevent being "disintermediated" by crypto-native stablecoins.

Diversification Strategies of Tech Giants

In addition to the main competitors, some tech companies and fintech companies are also looking for their own opportunities:

• A certain payment company has chosen to provide infrastructure services, offering developers the capability of "stablecoin as a service."
• A certain electronic payment platform attracts users by offering high "loyalty rewards".
• Large retailers facing legal restrictions may seek to collaborate with existing stablecoin issuers.
• A certain social media giant has become more cautious, focusing on providing cross-border payment services for creators.

Future Outlook

The stablecoin market may see a differentiation:

• The institutional market may be dominated by deposit tokens from a banking alliance.
• The US retail market may be led by the USDC Alliance.
• Emerging markets worldwide may continue to be dominated by the USDT alliance.
• Certain specific political and sovereign trading scenarios may be influenced by the USD1 alliance.

The battle of stablecoins is not only a competition of technology and business models, but also a contest of different financial philosophies and governance models. For ordinary users, this competition drives technological innovation, improves service quality, and brings more choices. Regardless of the final outcome, the arrival of the digital dollar era is an irreversible trend.