Stablecoin Growth: What’s Driving the Boom?

Paxful Team

5/2/2025

Stablecoins aren’t here to kill banks but to address specific needs and inefficiencies.

Imagine this: you’re sipping coffee, phone in hand, and with a few taps, you’ve just sent money to someone halfway across the world. No bank lines. No, “your transfer will be processed in 3–5 business days.”

No surprise fees eating away at your total. Just… done.

Welcome to the world of stablecoins.

They might sound like something out of a crypto nerd’s vocabulary, but stablecoins—especially ones like USDT (Tether)—are going mainstream fast.

So, what’s behind the stablecoin boom? Why are freelancers in Manila, startups in Berlin, and even some big-league corporations jumping on this digital bandwagon?

In this piece, we explore why they’re booming.

Key takeaways

Stablecoins are popular for the following reasons:

Stablecoins move fast. No delays. No banking hours.
Fees are minimal, sometimes less than $0.10.
They enable global financial inclusion, especially for the unbanked.
Inflation resistance makes them a lifeline in fragile economies.
They offer earning potential through lending platforms.
Growing trust from giants like Visa and PayPal fuels adoption.

💡Stablecoins aren’t just for crypto pros. They’re solving everyday problems for freelancers, families, and small businesses.

Traditional banking: Trusted but troubled

For thousands of years, banks have been the go-to guardians of our money. Back in ancient Mesopotamia, temples like the Temple of Shamash took deposits and issued loans, setting the stage for what we now call banking.

Today, not much has changed in that sense. Banks are still where most of us go to save money, borrow funds, or send payments across the globe. They’ve long served as the middlemen of the financial world, helping us manage our money day to day.

Thanks to regulations like the FDIC insurance in the U.S., the FSCS in the UK, and the CDIC in Canada, they’ve built a reputation for being safe, stable, and dependable.

But that reputation took a serious hit in 2008. The global financial crisis exposed deep flaws: reckless lending, overleveraged institutions, and a web of risky financial products that brought major banks to their knees. As governments scrambled to bail them out, everyday people were left asking: Can we really trust the system?

The not-so-hidden costs of banking

Fees that sneak up on you

Sending money overseas? Research by the World Bank shows that the global average of remitting $200 is 6.62%, plus what your bank decides to skim off the exchange rate. In sub-Saharan Africa, the average is 8.45%. Want to do the same transfer with a stablecoin like USDT? You’re usually paying less than a buck.

Sluggish speeds

Domestic transfers have gotten faster, sure. But international ones? Still crawling. Thanks to layers of middlemen and clunky old systems, your money can arrive in 3–5 business days. Stablecoins zip over in seconds, even on weekends.

Many are left out

Roughly 1.4 billion people worldwide don’t have access to a bank account (World Bank, 2021). That’s not just a stat—a massive chunk of the population is missing out because they lack documents, live in remote areas, or can’t meet account minimums. Stablecoins? All you need is a smartphone and an internet connection.

This is where stablecoins step in, offering a digital alternative that’s accessible to anyone with a smartphone. But what exactly are stablecoins, and who’s leading the pack? Let’s break it down.

What are stablecoins?

Stablecoins are a unique class of cryptocurrencies designed to maintain a stable value by pegging themselves to underlying assets like the US dollar, precious metals, or algorithms. Although relatively new, stablecoins have evolved rapidly since their early beginnings in 2014 with the launch of BitUSD, NuBits, and Tether.

These early digital dollars paved the way for a broader subclass of crypto assets. Since 2018, the space has seen explosive growth, reaching over $230 billion as of May 2025.

Today, while many stablecoins are floating around the market, only a handful play a significant role in everyday use. If you’re weighing the pros and cons of stablecoins vs. traditional banks, these are the digital dollar alternatives you need to know.

Why are millions of people, businesses, and institutions pivoting to stablecoins?

It comes down to this: Their unique ability to address longstanding pain points in traditional finance while unlocking new opportunities in the digital economy. In fact, the annual stablecoin transfer volume reached $27.6 trillion. Surpassing the combined volume of Visa and Mastercard in 2024 by over 7.68%.

Here’s what’s fueling the shift, with real-world examples and context to bring it all to life:

1. Speed and access: Money that moves like you do

Banks love their business hours. Stablecoins don’t have any. While a wire transfer might take 3–5 business days (and don’t even try sending anything on weekends and holidays), stablecoins work around the clock.

You send money, and it shows up seconds later, regardless of the sender’s location.

💡 Real-life win: A freelancer in the Philippines receives payment in USDT from a client in the United States. The funds arrive in her crypto wallet within seconds, ready to be converted to local currency, the peso. There are no SWIFT codes, no bank holidays, and no delays.

2. Lower costs and fewer fees: Keep more of your money

Ever tried sending money abroad and felt like half of it disappeared along the way? Banks and wire services often charge $25–$50 per transfer, and that’s before they quietly clip you on the exchange rate. In some instances, you pay intermediary or recipient fees.

Stablecoins usually cost less than a dollar to send, no matter how much you’re moving, and there is no interest manipulation.

On networks like Polygon or Solana, transaction fees are often less than $0.10, even for large sums. For instance, sending $10,000 in USDT might cost $0.50, compared to $50+ via a bank wire.

3. Financial inclusion: No bank? No problem.

Over 1.4 billion people(roughly 17% of the global population) still lack bank account access. Maybe it’s the paperwork, maybe it’s geography, maybe it’s the fees, or simply a lack of supporting infrastructure.

Whatever the reason, stablecoins cut through all of it. All you need is a phone and the internet. That’s it. In Kenya or Nigeria, merchants use USDT daily to get paid quickly and reliably without waiting on fragile local banking systems.

4. A hedge against inflation: preserving wealth in volatile economies

In countries where inflation is uncontrollable, holding onto local currency is like trying to catch water with your hands. It just… leaks away. Stablecoins give people a way to store value that doesn’t vanish overnight.

Think about a worker in Venezuela. They get paid in bolívars but convert to USDT right away, preserving their earnings before prices skyrocket again.

5. Regulatory clarity and institutional adoption: Gaining mainstream trust

Stablecoins are increasingly viewed as a bridge between traditional finance and crypto. Major issuers like Circle and Tether are subject to regulatory scrutiny, with USDC, for instance, backed 1:1 by cash and short-term U.S. Treasuries. This transparency builds trust among users and institutions.

Global financial giants like Visa, Mastercard, and PayPal now support stablecoin payments and integrate them into their networks. In 2024, PayPal launched its stablecoin, PYUSD, signaling mainstream acceptance.

Governments are also exploring stablecoins. Singapore and the UAE have piloted central bank digital currencies (CBDCs) inspired by stablecoin technology.

But before you dive in, are they as safe as they seem? Let’s weigh the risks.

Are stablecoins safe? Weighing the risks

Sure, stablecoins offer speed, low fees, and global reach—but are they safe? While they solve many of the headaches of traditional finance, they’re not without their red flags.

If you’re considering trusting them with your money, here’s what you should know.

1. Regulatory limbo: The rules are still being written

The biggest unknown? Regulation. Governments are still figuring out how to handle stablecoins, and that uncertainty can quickly turn into action.

China had a blanket ban on cryptocurrencies in 2021, declaring them illegal.
The U.S. and EU are kicking around new rules that could limit how and where you use them. For example, USDT has faced regulatory headwinds in the EU.

‼️If the laws shift, your stablecoins could be frozen or unavailable overnight in certain countries.

2. Centralized control: Trusting the middleman (Again)

Most stablecoins aren’t decentralized like Bitcoin. Companies run them, and that introduces a whole different kind of risk.

Tether (USDT) has spent years dodging questions about whether it has the reserves it claims.
USDC (from Circle) has shown it can freeze funds, as it did with addresses tied to sanctions.

So, if the company behind a stablecoin folds, mismanages funds, or gets hit with a regulation? Your “stable” assets might not be so stable anymore. The collapse of TerraUSD and its associated cryptocurrency, Luna, wiping out a market value of about $60 billion, is a poignant example.

3. Security & scams: One mistake can cost everything

Crypto doesn’t come with a safety net. Stablecoins are no exception.

No take-backs: Send to the wrong wallet address? That money’s gone—no chargebacks, no customer service hotline.
Hacks and fakes: Exchanges get hacked, and scams still happen. Remember TITAN? It collapsed in hours, wiping out millions. Or, Cashio, a Solana-based stablecoin, was exploited for over $28 million.

One phishing link or typo can mean losing everything, even when using a legitimate stablecoin.

Future outlook: Can stablecoins and banks coexist?

Stablecoins are shaking things up, no doubt. But are they here to take over or push banks to level up?

It’s tempting to frame this as a winner-takes-all battle—new tech vs. old institutions—but the truth is probably less dramatic. Stablecoins bring speed, low fees, and global access.

Despite their flaws, banks still provide structure, safety nets, and the regulatory muscle many people trust. The future might be less about one replacing the other and more about how they compete—and maybe even collaborate.

Rather than a zero-sum conflict, the future likely involves coexistence through competition and collaboration, with each addressing distinct needs while adapting to the other’s strengths.

Banks aren’t sitting still: Enter the CBDCs

Central banks have seen the writing on the wall; their answer is the CBDC—Central Bank Digital Currency. Think of it as a government-approved, blockchain-lite version of digital cash.

China’s digital yuan is already in the wild and has been tested in real transactions.
The European Central Bank is deep into plans for a digital euro.

Hybrid models of banking

There’s a growing idea that we’re headed toward a hybrid financial system. One where traditional banks borrow some tech swagger from crypto, while stablecoins find their lane instead of trying to replace everything.

JPMorgan’s JPM Coin is already being used for real-time corporate transfers.
SWIFT—the old-school messaging backbone of global banking—is testing blockchain for faster cross-border payments.
Visa partnered with Circle in 2020 to integrate USDC into its payment network, enabling merchants to settle transactions in stablecoins via traditional banking rails.

If banks can modernize their plumbing, they could narrow the gap. Meanwhile, stablecoins could continue thriving in niches banks don’t serve well, like remittances, DeFi, or markets with weak local currencies.

Bottom line: Stablecoins are here to stay

Stablecoins like USDT didn’t just show up to play; they’re rewriting the rules. By tackling some of the most frustrating parts of traditional banking (think: sluggish transfers, surprise fees, and limited access), they’ve carved out a clear role in the future of finance. Fast, cheap, and open to anyone with a smartphone? That’s a hard combo to beat.

But let’s not pretend it’s all upside. Traditional banks still hold the cards regarding regulation, deposit insurance, and trust—they’ve been the financial safety net for generations. Stablecoins may be the flashy new tool, but banks aren’t obsolete. Not yet, anyway.

In the end, it’s not about choosing one or the other. It’s about knowing what each does best and using them accordingly. The real win? A future where people have more options, not fewer, for moving, storing, and growing their money.

It’s not always a matter of picking sides. Plenty of people are already mixing the best of both worlds. But as stablecoins keep evolving and banks scramble to keep up, one big question lingers:

Want to explore stablecoins? It is simple: set up a wallet, try a small USDT transfer, or check out our guide.

How to Buy, Sell, Send, and Receive USDT on Paxful

The future of money is here. How will you make it yours?

👉Additional readings:

Important note: These materials are for general informational purposes only and do not constitute financial, investment, or professional advice. Cryptocurrency investments involve significant risks, including potential substantial financial loss, and we do not endorse specific investments, tokens, or projects. Always conduct your own research and consult qualified financial or legal professionals before investing, as Paxful disclaims liability for any losses arising from reliance on these materials, to the fullest extent permitted by law.