Shakey ground: When stablecoins aren’t so stable

There’s no denying stablecoins have exploded this year, and the surge in value, now over $275 billion, is impossible to ignore. But excitement isn’t a substitute for reliability. Despite the noise, the stablecoin landscape is still in the development stage. 

Big winners will emerge, while others are destined to fizzle out. There is profit to be made, but only for those who can cut through the hype and spot the real leaders of tomorrow from the future flops.

More than a fad

The crypto space is still dominated by popularity contests and herd mentality. The next ‘big thing’ drives interest and sways community opinion. While this is normal in the crypto landscape, it presents problems around trust. If a project can’t back up its promises with substance, it gets exposed quickly, especially when institutional capital starts asking tough questions.

We don’t need to look far for examples of where stablecoin hype has not delivered. The collapse of TerraUSD (UST) wiped out tens of billions in market value despite becoming the third-largest stablecoin at the time and reaching over $18 billion. While we may never see collapses as large as UST again, the risk of an overhyped but untested stablecoin is still there.

Failures like that are not just a financial hit; they set adoption back and destroy trust. For momentum to keep up, investors and builders need to start caring more about fundamentals than popularity.

Traditional support

No matter how much crypto wants to go it alone, there’s no escaping the influence of traditional finance. Serious institutional support is only going to make stablecoins more relevant. Those who figure out how to connect and collaborate with big institutions are going to shape what comes next and are likely to lead the pack.

We’re already seeing this take shape. J.P. Morgan’s Kinexys is positioned as helping institutional clients settle almost instantly, while McKinsey has highlighted the value that stablecoins hold for the future of payments. The projects building real, resilient infrastructure are getting noticed and backed.

Traditional finance support brings more than just third-party endorsement and a reputation boost. As Brian Brooks stated, institutional stablecoin usage will help build a sense of safety around the asset and further adoption. Those who get on board will become the market’s trusted names, while those staying on the sidelines risk being left in the dust as institutional adoption takes hold. 

The future is consolidation

Consolidation is no longer a possibility; it is inevitable. Institutional support is shaping the future of stablecoins in real time, and as the stakes rise, only the strongest projects will survive. Citi GPS anticipates stablecoins reaching $1.9 trillion by 2030, citing “strong momentum in the ecosystem led by integration by payment networks, new layer-1 blockchains, and regulatory clarity.” As history shows us in rapidly growing spaces, expansion will be followed by a shakeout, and not everyone will make it to the top.

The reality is, only a handful of stablecoins will rise to become banking and institutional standards. The rest will get weeded out by market forces, compliance hurdles, or simple lack of utility. If you can’t deliver real-world value, prove your governance, and show transparent audits, including frequent, public attestations, you won’t earn investor trust, let alone survive the shakeout.

This goes beyond technology or compliance box ticking. Even the most robust, transparent stablecoin will struggle in the wrong environment. You need to be operating in places that encourage digital asset growth. Projects built in markets that foster innovation and regulatory clarity will thrive; those stuck in the wrong place risk withering, regardless of their fundamentals.

The United States is currently paving the way, but it is not the only one. Other regions prioritizing crypto growth, providing clear rules, and opening the doors to sector expansion could just as easily become the prime locations for tomorrow’s breakthrough stablecoins.

There’s no shortage of hype around stablecoins, and that passion is warranted. But only smart, rational decision-making will separate the lasting names from the next wave of failures. For institutions, stablecoins aren’t just another asset; they are the entry ramp into web3 itself. Success will come to those who align with future leaders, projects with true market fit, strong frameworks, and ecosystems built for growth. Pick wisely now, and that’s where the real value, use cases, and trust will be found as this industry matures.