Author: Stepan | squads.xyz
Compiled and Edited by: BitpushNews
2025 has made one thing clear: stablecoins are here to stay, and their underlying infrastructure will become the cornerstone for the financial services industry's construction over the next decade.
As the year draws to a close, I've been reflecting on where we are, the lessons 2025 has taught us, and where we're headed. Here are a few observations on the state of the stablecoin economy as we head into 2026.
A few upfront notes:
- Claude and Deni also contributed to the content of this article.
- Squads is a fintech company, not a bank or a digital asset custodian.
- None of the content herein constitutes financial advice.
- The charts and images in this article were generated by Nano Banana, with a style inspired by the Tom Sachs aesthetic, which I greatly admire.
Data Overview
In 2025, the stablecoin market cap surpassed $300 billion, up from just $205 billion at the start of the year. Nearly $100 billion in new supply was added in less than twelve months.
For context: total supply grew by $70 billion in all of 2024, and actually declined in 2023.
These projections reflect strong institutional conviction. J.P. Morgan expects the stablecoin market cap to reach $500 billion to $750 billion in the coming years. Citi's base case forecasts $1.9 trillion by 2030. Standard Chartered predicts $2 trillion by 2028. Stablecoin issuers are now among the top ten holders of US Treasuries globally.
This is no longer primarily a crypto story. It's a story about money. And the infrastructure, services, and product layers that enable this growth will be among the most valuable things built in the next decade.
What We Learned from the Synapse Incident
Part of what's driving this shift is the growing recognition that stablecoin infrastructure offers a fundamentally different trust assumption. It's not just that building on stablecoins is cheaper and faster (though it is), but that you're trusting math and code, not a centralized entity's "trust me, bro" promise about where your money is.
To understand why this matters, look at what happened with Synapse.
Synapse Financial Technologies was once the poster child for Banking-as-a-Service (BaaS) companies. It was backed by top investors, connected over 100 fintech partners with FDIC-insured banks, and served ~10 million end users. The pitch was elegant: fintechs get banking capabilities without becoming banks; banks get distribution without building apps; consumers get a modern experience with traditional protections.
In April 2024, Synapse filed for Chapter 11 bankruptcy. Over 100,000 people lost access to their funds. The court-appointed trustee found a $65M to $96M gap between what customers were owed and what the banks actually held. In a December 2024 hearing, the trustee (a former FDIC chair) compared the situation to her father's experience of seeing his savings wiped out during the breakup of Yugoslavia.
The root cause was a failure in record-keeping and reconciliation at the middleware layer. Synapse was responsible for tracking which assets belonged to which fintechs at which banks. When that system broke down, there was no single source of "truth" to fall back on. Banks blamed each other. Fintechs had no direct line to customer funds. Ordinary people watched their savings disappear into a fog of bureaucratic uncertainty.
Crypto has had its own catastrophic failures: FTX, Celsius, Terra/Luna. But those failures came from centralized custodial entities taking risky bets with deposit assets. They failed for the same reason Synapse did: opaque systems where no one could see what was actually happening until it was too late.
The lesson from both traditional fintech failures and crypto failures is the same: when you can't see where the money is, you can't know if it's safe.
Self-Custody and the Insurance Question
Self-custodied stablecoin accounts change the risk model in a way that makes FDIC insurance less necessary for many use cases.
Traditional banking operates on fractional reserves. When you deposit funds, the bank lends most of it out, keeping only a fraction on hand. Your "balance" is just an IOU. If enough people ask for their money back at once, or if the bank's loans go bad, the money isn't there. FDIC insurance exists to protect against this failure mode. It's insurance against the bank mismanaging your money.
Self-custodied stablecoin accounts work differently. The assets exist in a smart contract. At any moment, anyone can verify that the funds are there. Not as an IOU, not as a claim on fractional reserves, but as the actual asset under the user's control. There is no counterparty risk from the bank's lending decisions.
But this argument often misses a point: the stablecoin itself carries issuer risk. A smart contract full of USDC does you no good if the issuer, Circle, faces a regulatory crisis or a run on its reserves. Holding USDT is inherently a bet on Tether's ability to manage its reserves. Self-custody removes intermediary risk, but it does not remove issuer risk.
The difference is that issuer risk is monitorable. You can check the proof of reserves. You can watch the on-chain flows. You can diversify across issuers. Traditional bank risk is hidden inside the black box of the institution until a catastrophic event occurs.
This doesn't mean self-custody is for everyone. Large institutions will likely still want regulatory frameworks and insurance products. But for many use cases, self-custody with monitorable issuer risk is superior to an opaque institutional trust model that requires insurance as a backstop.
Global Reach and the Last-Mile Problem
Stablecoins offer something traditional fintech cannot: true global reach from day one.
A wallet works anywhere. A smart contract doesn't care what jurisdiction its users are in. Transactions between stablecoins are inherently borderless. For businesses paying remote contractors, managing funds across entities, or settling with vendors who accept stablecoins, this infrastructure works instantly, globally.
Contrast this with the playbook for traditional international expansion: you need local banking partners, local licenses (often different ones for different business lines), local compliance teams, local legal entities. Each country is essentially a new startup. This is why most digital banks either operate only domestically or spend years expanding to just a handful of markets.
Revolut has been at it for nearly a decade and is still not fully rolled out.
The bottleneck for stablecoin infrastructure is the "last mile": connecting to fiat currency. Fiat on-ramps and off-ramps still require local licenses and local partners. You can't get around that entirely.
But there's a world of difference between "we need to solve fiat connectivity in this market" and "we need to rebuild the entire banking tech stack in this market." The "last mile" is modular. You can partner with local orchestration services for fiat conversion without rebuilding core infrastructure from scratch. You can reach most of the world via stablecoin rails, then layer on fiat partners where needed.
Traditional fintech cannot launch at all without building a full tech stack in each market. Native stablecoin companies are born global, then solve the last-mile problem incrementally as demand requires. It's a fundamentally different expansion equation.
The Battle of Purpose-Built Blockchains
Several well-funded teams are building new blockchains specifically for stablecoin payments. The core idea: existing blockchains are optimized for trading, not payments, and a purpose-built infrastructure can offer better throughput, lower latency, and compliance tools tailored for payment-specific needs.
It's a reasonable thesis, put forward by a group of very smart people. Stripe and Paradigm are building Tempo. Circle is building Arc.
But there's a counter-argument worth considering.
Building a new Layer 1 from scratch means trust has to be built from zero. Blockchains are trust machines, and trust is earned through operation. It comes from a track record of years without catastrophic failure, from securing billions without bugs, from a developer ecosystem that understands the edge cases, from code that has been battle-tested by attacks. It's the Lindy effect applied to infrastructure.
Mature chains have this accumulated trust. Solana has processed trillions in transaction value and has mature tools, wallets, bridges, and integrations. Ethereum has an even longer operational history. The question is whether the gap between what these chains offer today and payment-specific needs is greater than the trust gap a new chain must fill.
There's also the question of neutrality. A chain controlled by a large payments company, no matter how "neutral" it's positioned, has that company's interests baked into its architecture. Building on a truly neutral public infrastructure offers a different set of guarantees.
Agentic Finance
When people talk about Agentic Finance today, they often imagine agents that manage your financial life: making investment decisions, managing your portfolio, optimizing your entire financial existence on your behalf.
That's not the real opportunity, at least not yet.
The real opportunity is in the mundane and boring bits. It's about having agents handle the day-to-day financial processes that currently require manual operation: monitoring invoices, matching them to purchase orders, initiating payments, processing reimbursements, executing recurring transactions. Not replacing human judgment on important decisions, but automating the tedious work that creates operational drag.
The question is: how does an agent actually move money?
Traditional payment rails are built for humans. They assume a person with credentials is initiating the transaction. Giving an agent your login credentials is both a security nightmare and a compliance violation. Agents can hallucinate, be manipulated, or fail at machine speed.
This is where stablecoin rails and smart contracts become truly important. The agent doesn't get credentials; it gets a set of restricted permissions encoded in a smart contract: move at most $X per transaction, only to pre-approved addresses, only at certain times or for certain purposes. These constraints are enforced by code. The agent is architecturally incapable of overstepping because the permission definitions are part of its architecture.
The verifiable, bounded, transparent trust assumptions that blockchains provide are the exact core elements needed when software moves money autonomously. Traditional systems require you to trust the agent not to misbehave. Smart contract systems architecturally make it impossible for it to misbehave outside of defined constraints.
This doesn't eliminate all problems. What happens when an agent makes a mistake within its constrained permissions? Who is liable when an agent approves an invoice that technically meets all coded criteria but is actually fraudulent? These questions need answers.
But this starting point of architecturally enforced permission boundaries is something blockchain systems have natively and is very difficult to retrofit onto traditional rails. Autonomous finance is coming. And the infrastructure that makes it safe will necessarily be stablecoin-native.
Rethinking Security
The gold rush into stablecoins is attracting teams with wildly different attitudes toward security. This will not end well for some of them (and unfortunately, for their customers).
A pattern is emerging: move fast, get users, figure out the hard problems later. Teams use fuzzy definitions of "self-custody" that obscure the actual trust model. They rush to integrate without proper security and vendor reviews. They take shortcuts on key management. They treat operational security as a cost center.
Some of this is understandable. The market is moving fast. Competitive pressure is intense. Spending X extra months getting security right might mean a competitor captures the market.
That tradeoff makes sense in most industries. It does not in financial infrastructure.
Building a bank, or anything bank-like, means building trust over decades, not quarters. It means managing risk conservatively even if aggressive approaches might grow faster. It means creating systems that can handle edge cases no one foresaw.
The teams that will win in 2026 and beyond are the ones with genuine domain expertise and a security-first mindset.
The Privacy Conundrum
A contrarian take of mine: privacy in crypto has largely been a checkbox concern so far. For trading, DeFi, and speculation, the lack of substantive privacy hasn't been a blocker. The whole ecosystem mostly functions fine with pseudonymous addresses and public transaction histories.
But that will change as stablecoin infrastructure brings real business activity and productive economic activity on-chain.
When real companies are moving operational funds on stablecoin rails, privacy becomes critical. Competitive intelligence leakage is a real concern: your suppliers, your customers, your cash flow, all visible to anyone who cares to look. No serious company wants its financial operations exposed to competitors, and no CFO will move significant money movements to a rail where every transaction is publicly analyzable.
This is a problem we need to solve today, before it becomes a bottleneck for future adoption.
The good news is that the privacy model for stablecoins doesn't require the full cypherpunk vision to become reality. We don't need full anonymity. We need selective disclosure, which is a fundamentally different goal.
Selective disclosure means: proving what needs to be proven without exposing everything else. Proving you have sufficient funds without showing your balance; proving a transaction is compliant without exposing counterparty details; proving your identity meets requirements without submitting documents. The owner of the funds can see everything, the system can verify everything needed for compliance, and everyone else sees only what is intentionally disclosed.
We have the technology to solve this. I speak with many brilliant teams building great privacy infrastructure.
The problem is that this technology is early. The codebases are large, difficult to audit, difficult to formally verify, and unproven in battle. They require completely different trust and security assumptions than the infrastructure we've already built. The crypto ecosystem spent years hardening core protocols, accumulating the kind of operational trust that only comes from surviving attacks and edge cases. Layering new, unproven privacy tech on top risks undermining that foundation.
The real challenge is adding privacy features without making major security tradeoffs. This might mean baking privacy features deeper into the Layer 1 protocols, or finding ways that don't require massive trust in new cryptographic systems.
Looking Ahead
The 2025 growth story for stablecoins has mostly been about moving what fintech already does onto better infrastructure: payments, yield, spending, card services. Like a global Mercury, or a chain-native Revolut. That's good. It's faster, cheaper, and can reach markets that traditional fintech would take years to touch.
But what stablecoin rails unlock is much larger than just doing the same things more efficiently. You get programmable money. You plug into the internet capital markets, where genuinely novel financial primitives are being built every day. You get the ability to have agents manage money under real guarantees, not just trust that they won't misbehave.
This is our chance to rethink what financial services should actually look like.
I'm not seeing enough teams pursuing this yet. The opportunity is right there, and most players in the industry are still just running 2015's fintech playbook on a new rail. I hope to see that change in 2026.
