Stablecoin Market Sees Significant Contraction for First Time in Four Years
For the first time in four years, the stablecoin market's total capitalization has contracted significantly, dropping by over $10 billion from its May peak to around $310 billion in late July. This represents the largest monthly outflow since the collapse of Terra in May 2022. Paradoxically, while the supply shrank, adjusted transaction volume in June 2026 surged to a record $1.79 trillion, a 63% monthly increase.
A key driver of this divergence is the **$GENIUS Act**, passed in July 2025, which prohibited stablecoin issuers from paying interest on payment-focused stablecoins. This did not eliminate the demand for yield but redirected capital towards alternatives like tokenized U.S. Treasury funds, DeFi lending protocols, and offshore stablecoin issuers. The shift is evidenced by the rapid growth of the Real-World Asset (RWA) sector, where tokenized Treasury funds grew from $11 billion to $16 billion in five months.
The changing dynamics have reshaped the competitive landscape. **$USDC** has become the dominant instrument for institutional transactions, accounting for approximately 70% of transaction volume in the first half of 2026 and $1.21 trillion in adjusted transfer volume for June. Meanwhile, **$USDT** retains its lead in overall market capitalization, serving as a "savings account" in developing economies.
The industry's fundamental economics are transforming: the old issuer model reliant on yield from reserves is diminishing; revenue is shifting towards infrastructure providers like payment networks and blockchains that charge transaction fees; and corporate (B2B) payments, while still a small fraction of total volume, are experiencing explosive growth.
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