Stablecoins losing cross-border appeal; Circle v Tether in DeFi fight

Stablecoin use is increasingly in-country rather than cross-border, Tether and Circle (NASDAQ: CRCL) are locked in a DeFi knife fight, and the EU is imposing even more sanctions on Russia’s ruble-backed tokens. 

On April 25, the crypto division of the Andreessen Horowitz (a16z) (NASDAQ: ZADIHX) venture capital group released nine charts detailing the group’s views on “what stablecoins are becoming.” The TL;DR is that, in addition to serving as a trading tool and a savings vehicle in jurisdictions with shaky fiat currencies, stablecoins are now “becoming core financial infrastructure.”

The first chart shows that stablecoin transfer volume (adjusted to filter out “bots and other artificially inflationary activity”) hit $4.5 trillion in Q1 2026, roughly twice the amount recorded in Q2 2025, the quarter that preceded Congress approving the stablecoin-focused GENIUS Act. Transfer volume was already on a steady upward trajectory, but GENIUS appears to have “amplified” this trend.

The narrative is “more complicated” when it comes to the European Union’s Markets in Crypto Assets (MiCA) regulation. When MiCA’s full provisions kicked in at the end of 2024, the delisting of Tether’s noncompliant USDT stablecoin by some digital asset exchanges resulted in “a spike in non-USD stablecoin activity that briefly exceeded $40B” per month. The monthly numbers have since slid back to the $15-25 billion range, although that’s still higher than the pre-MiCA figures, creating “a persistent market for non-USD stablecoins where one barely existed before.”

There were 789.5 million consumer-to-consumer (C2C) ‘adjusted’ stablecoin transactions in 2025, nearly twice 2024’s figure. Last year’s consumer-to-business (C2B) transaction count (284.6 million) was less than half the C2C figure, but this represented 128% growth from 2024. Business-to-consumer (B2C) transactions totaled 14.6 million last year, up from 2024’s 8.9 million.

Stablecoin velocity, defined as ‘adjusted monthly transfer volume as a multiple of circulating supply,’ rose from 2.6x in early 2024 to 6x today. a16z claims this indicates “a real payments network, one where the underlying currency is being used, not just held.”

‘Real economy stablecoin payment flows’ are dominated by B2B payments, which a16z claims accounted for $150-230 billion last year, up roughly two-thirds from 2024. However, some critics are curious as to who these businesses are and what they’re allegedly buying with all these billions.

In geographic terms, Asia currently claims a 63% share of ‘real economy stablecoin payment volume by region of origin’ (which excludes ‘inflationary inorganic activity, trading, treasury movements and protocol operations’). North America was a distant second with 24%, and Europe was third with 13%. These three regions accounted for $390 billion of overall volume, with (curiously) Latin America and Africa accounting for less than $1 billion combined.

Remittances have driven the stablecoin narrative, but a16z claims cross-border transactions’ share of stablecoin payment volume has fallen from just under one-half to just over one-quarter over the past two years. Intra-country transactions’ share rose from just over one-half to nearly three-quarters over the same span.

a16z crypto execs Robert Hackett and Jeremy Zhang say the chief takeaways are that stablecoins are “global by design, yet increasingly local in practice.” And while P2P transfers remain the largest slice of stablecoin activity, “increasingly more usage is going to everyday commerce.”

The data behind a16z’s charts was derived from a variety of sources, primarily the analytics firm Allium, with additional material from Artemis, Dune, McKinsey, Visa (NASDAQ: V), and Boston Consulting Group.

Tether v Circle

The recent spike in the BTC token’s fiat price was preceded (as always) by an equally sharp surge in the market cap of Tether’s market-leading USDT. On April 10, USDT’s market cap was just over $184.1 billion. Two weeks later, USDT hit a new all-time high cap of $189.8 billion, only a few hundred million higher than its current cap.

USDT’s closest rival, the USDC stablecoin issued by Circle, saw its own market cap hit a new all-time high of $79.8 billion in mid-April, although it has since slipped back to $77.3 billion, essentially where it was when the month began.

USDC’s slide followed the $285 million exploit of the Solana-based Drift Protocol by North Korea’s state-sponsored hacking groups. Circle was widely criticized for failing to act in a timely manner to freeze the USDC linked to funds stolen from the platform and quickly converted/laundered.

The Drift exploit was followed by the $292 million exploit of the Kelp decentralized autonomous organization (DAO), for which North Korea’s Lazarus Group was similarly blamed. The growing sense that decentralized finance (DeFi) platforms—on which USDC is the digital currency of choice—are about as secure as a tip jar at a Baltimore hot dog stand appears to have motivated many USDC holders to withdraw their USDC from DeFi platforms post-haste.

A couple of weeks after the Drift exploit, Tether twisted the knife by announcing “a strategic collaboration with Drift Protocol and partners to support user recovery.” This included establishing “a structured recovery plan backed by up to nearly $150 million in combined support, including up to $127.5 million from Tether.”

In gratitude, Drift agreed to “transition its settlement asset from USDC to USDT, bringing more than 128,000 users and over 35 ecosystem teams onto USDT-based trading … positioning USDT as a primary settlement asset on one of Solana’s largest perpetual trading venues.”

Tether added that this shift from USDC to USDT “reinforces Tether’s role as a reliable settlement asset within the Solana ecosystem.” And in an apparent dig at Circle’s reluctance to act against crypto thieves absent a direct request/order from law enforcement authorities, Tether said that “rather than stepping back after incidents,” Tether has “taken a more active role in supporting recovery efforts.”

Tether CEO Paolo Ardoino couldn’t resist adding “Tether cares” to his tweet announcing the Drift deal. While Circle’s CEO Jeremy Allaire didn’t take Ardoino’s bait, others noted that Drift’s pre-exploit revenue figures mean the protocol likely won’t repay its Tether debt for another 21.4 years, making this effectively an acquisition rather than an altruistic bailout. (Others have even less charitable explanations.)

Meanwhile, aggrieved Drift customers (and/or opportunistic law firms) have launched a class action suit that accuses Circle of “knowingly permitting the attackers … to offload $230 million of their spoils over the course of several hours by using Circle’s own stablecoin USDC and its blockchain bridge CCTP, instead of freezing the funds.”

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Meta picks USDC for creator payouts

The process also involves payment processor Stripe, with Meta telling creators that they will continue to receive standard tax forms from Meta but “may also receive specific crypto-related reporting directly from Stripe.” Meta urged creators to keep both sets of records to ensure proper tax compliance.

Meta previously dabbled in the stablecoin sector through its efforts to create an in-house token (Libra/Diem), which ended ingloriously four years ago. Meta began rethinking its stablecoin position last year, and it was reported a few months ago that Meta hoped to launch this integration in the second half of 2026. Assuming the Colombia/Philippines tests go to plan, Meta appears on track to meet that target.

Meta issued a statement saying “we strive to offer the most relevant payment methods, which is why we are exploring how stablecoins could become part of our suite of options.” Meta also clarified that it is not thinking about reviving its in-house token plans.

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Western Union’s new stablecoin ecosystem ready to launch

Last week, Western Union (NASDAQ: WU) CEO Devin McGranahan said his company’s new stablecoin (USDPT, or ‘U.S. Dollar Payment Token’) is in “its final stages of readiness and is expected to go live next month.” The Solana-based USDPT is issued by Anchorage Digital but will be ‘operationalized’ via Western Union’s new Digital Asset Network (DAN).

McGranahan clarified that USDPT is “not initially consumer-facing.” Instead, it will serve “as an alternative to the interbank SWIFT settlement network that we use today to settle with our agents. We are launching in a couple of countries with some important agent partners in the next quarter to begin moving and settling between us and our agents on-chain in real time at much faster speeds, including weekends and holidays.”

McGranahan added that the company plans to launch its first DAN network partner this week, with additional partners following “shortly thereafter.” The idea is to allow Western Union to function as “a funds off-ramp or payout option” for digital asset wallet users.

Western Union also plans to bring USDPT and DAN directly to consumers via its new StableCard, which will launch in “a couple of countries in the next 90 to 180 days.” The company believes StableCard will prove “particularly compelling in inflation-sensitive markets where customers want dollar-denominated value with immediate practical utility.” The ultimate goal is to have USDPT, DAN, and StableCard “operate as a connected ecosystem.”

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EU goes after A7A5’s support networks

Tether recently made headlines for acceding to a U.S. government ‘request’ to freeze $344 million worth of USDT linked to Iran’s efforts to evade U.S. economic sanctions. Tether celebrated its cooperation with the feds, noting that it had frozen over $4.4 billion in USDT linked to criminal activity over the years.

This included the freezing of $23 million in USDT linked to transactions on the defunct Garantex exchange, which was taken offline one year ago as part of a joint U.S./EU operation targeting sanctioned Russian entities. But like a phoenix, Garantex rose from the ashes in the form of Grinex, a Kyrgyzstan-based exchange that became a linchpin of Russia’s sanctions-evasion efforts.

The EU imposed sanctions on Grinex last October, citing its links to the ruble-backed stablecoin A7A5, whose parent company is partly owned by Russia’s state-owned Promsvyazbank (PSB). Unlike Tether, A7A5-linked firms don’t particularly fear U.S./EU blowback, and thus A7A5 isn’t likely to be frozen due to its links to illicit activity. But there appear to be other retaliatory arrows in the U.S./EU quiver.

Earlier this month, Grinex abruptly suspended its operations after claiming to have been the victim of a “large-scale cyberattack with indications of involvement by foreign intelligence agencies.” The exchange claimed the attack involved “an unprecedented level of resources and technology, accessible only to entities of hostile states” and appeared to have been “coordinated with the aim of directly harming Russia’s financial sovereignty.”

Grinex claimed to have lost over RUB1 billion (US$13.3 million) “belonging to Russian users” via this attack, although TRM Labs reported that the loss was closer to $15 million. TRM also claimed that TokenSpot, another Kyrgyzstan-based exchange suspected of being a Grinex front, may have been attacked simultaneously by the same shadowy actor.

One week after Grinex went dark, the Council of the EU issued its 20th package of restrictive measures imposed since Russia’s invasion of Ukraine four years ago. The new sanctions, which include transaction bans on 20 Russian banks, are intended to “further cripple Russia’s economy and war machine.”

But the new measures also designate “a Kyrgyz entity which operates a platform where significant amounts of the government-backed stablecoin A7A5 are traded.” This would be CJSC TengriCoin, the entity behind the Meer exchange.

The EU also plans “a total sectoral ban on providers and platforms established in Russia that allow the transfer and exchange of crypto assets.” The EU has also forbidden “netting transactions with Russian agents,” meaning transactions can no longer be aggregated and/or offset without funds having to cross an international border.

Also under the EU’s ban-hammer are transactions involving another ruble-backed stablecoin (RUBx) and those involving Russia’s digital ruble, the central bank digital currency (CBDC), currently the subject of a pilot program but expected to expand nationally later this year. The EU is withdrawing all support for the digital ruble’s development and has also sanctioned the digital ruble launched by Russia’s neighbor, Belarus.

(Blockchain analytics firm Elliptic did a deep dive into the new sanctions and what digital asset operators/fintechs need to know to stay on the EU’s good side after May 24, when the new rules take effect.)

The EU’s sanctions will likely accelerate A7A5’s eager expansion into African markets, while another Garantex clone (Griftex? NomDeGuerrex?) will likely rise if Grinex fails to pick itself up off the canvas. The EU will then sanction that exchange. And round and round we go.

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